Help To Buy: Is it any use?

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When it comes to buying a home, any help is greatly appreciated which is why the Help To Buy schemes sounds as though it will be of interest to many first time buyers and movers in the UK. Of course, like any scheme, the fact that there are limitations or exclusions means that many people are unhappy about what is on offer and that they think the scheme is of no use to them. This is why it is essential that you review the options available to you on the UK Help To Buy scheme.

The options available are:

  • Help To Buy ISA
  • Shared Ownership scheme
  • Equity Loan

One annoyance for many people is that the Mortgage Guarantee scheme is no longer available; this was withdrawn to new lenders as of 31 December 2016.

Eligibility of the schemes

For the Help To Buy ISA, you must be a first-time buyer and you are not allowed to own property anywhere else in the world. Other criterion includes you must be at least 16 years old, you must be resident in the United Kingdom, you must have a valid National Insurance number and you must have any other active cash ISAs operating in the same year.

To qualify for the Help To Buys ISA, this must be the property where you intend to live, the property must be purchased with a mortgage and the cost of the property should be more than £250,000 or £450,000 if the property is in London.

For the Shared Ownership scheme, your annual household income must be £80,000 or less, or £90,000 or less if you live in London. The scheme is open to people who first-time buyers, people who have previously owned a property but no longer do so and people who are an existing shared home owner and they are looking to move. Basically, this scheme is open for the majority of people apart from current home-owners.

For the Equity Loan, you can be a first time buyer or a current homeowner but you must be looking to buy a newly built property up to a value of £600,000.

These criteria mean that if you are a current homeowner looking to buy anything other than a new build property, the Help To Buy scheme options are not for you. It is easy to see why the criterion is weighted in favour of first-time buyers because there is a need to bring support to these people.

If you are eligible for one of the schemes, there is a great deal of benefit to come from them. For instance, the Help To Buy ISA provides support in raising the all-important deposit, which is one of the most important factors in buying property. If you are a couple, it is important to remember that the scheme is per person, not per household, so if you have the means, it is possible for both people in the relationship to take advantage of the scheme, allowing a household to save more money which can be used in the purchase of a property.

Help To Buy ISA

It is possible to save up to £200 per month and in your initial month; you can make a deposit of £1,200. The minimum bonus provided by the Government is £400, and as the bonus is 25%, you need to save at least £1,600 to receive a bonus. The maximum bonus that can be earned is £3,000 and you would have to save £12,000 to receive this bonus. As stated above, couples can pool their resources, which mean that a household could earn up to £6,000 as a bonus through the Help To Buy ISA scheme.

Help To Buy Equity Loan

With the Equity Loan scheme, you can receive up to 20% of the cost of the new build property, leaving the buyer with a need to save a 5% deposit, allowing them to obtain a 75% mortgage. There will be no loan fees charged on the 20% loan for the first five years of property ownership.

Whether the Help To Buy scheme is of benefit to you depends on your circumstances and what style of home you are looking to buy. Yes, there are many people who are unable to benefit from the Help To Buy scheme but equally, there are many people who have found this assistance invaluable in getting on to the property ladder. This is why it is essential that you review the options with your own circumstances and requirements in mind.

 

Find a property to buy or rent on Housemap.com, launching 20th of December