Help to Buy: explained

8th January, 2019, by Steve Parker ANAEA

Did you know that Help to Buy is available across all of the apartments and houses currently for sale at The Yacht Club, Trent Basin, Waterside Apartments and Trent Bridge Quays? Help to Buy is a fantastic scheme – read our blog to find out more about the options it gives  and how it can help you purchase your perfect property.

What is Help to Buy?

Help to Buy is a government backed scheme which is designed to aid first-time buyers and existing homeowners in purchasing a home with as little as a 5% deposit. There are a variety of options designed to making the buying process a little easier.

Help to Buy: ISA

If you are saving to buy your first home and choose to save money in a Help to Buy: ISA, the government will boost your savings by 25%. This means that for every £200 you save, you will receive a government bonus of £50.

It’s important to note that you’ll only be able to open a Help to Buy: ISA until 30 November 2019. After that, they won’t be available to any new savers. But as long as you opened your Help to Buy: ISA before then, you’ll be able to keep saving into your account until 30 November 2029. You must claim your bonus by 1 December 2030.

Getting started

You can open a Help to Buy: ISA with a wide range of banks, building societies and credit unions. Accounts are available to each buyer rather than each household. This means that if you are planning to buy with someone else you can both save in separate accounts and receive a combined government bonus of up to £6,000 towards your home together. You can only have one Help to Buy: ISA at any time, but you are able to transfer to a new bank, building society or credit union should you wish.

Opening a Help to Buy: ISA doesn’t mean you have to take your mortgage out with your Help to Buy: ISA – you are still free to find the mortgage that suits you through a provider of your choice.

Saving

You can deposit a lump sum of up to £1,200 in your first month to kick-start your account. After that you can save up to £200 per calendar month. The minimum government bonus is £400, for which you will need to have saved at least £1,600 before you can claim any bonus. The maximum you can receive is £3,000 – to receive that you need to have saved at least £12,000.

Getting your bonus

When you are close to buying your first home, you will need to get your solicitor or conveyancer to apply for your bonus. When they receive it, it will be added to the money you are putting towards your first home. You aren’t able to use the bonus to pay for solicitors fees, the deposit due at the exchange of contracts or any other indirect costs associated with buying a property.

You need to claim your bonus within 12 months of closing your account, and must be claimed before the completion of your property purchase so make sure not to close your Help to Buy: ISA unless you are confident that you are about to buy your home.

You can use the Help to Buy: ISA in conjunction with other Help to Buy schemes, including the Equity Loan and Shared Ownership.

Help to Buy Equity Loan

Again, equity loans are available to both first-time buyers and homeowners. There is no maximum household income but the home you wish to buy must be newly-built with a price tag of up to £600,000.

With a Help to Buy: Equity Loan the government lends you up to 20%* of the cost of your newly-built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. You also won’t be charged loan fees on the 20% for the first five years of owning your home.

You can’t own any other property at the time you buy your new home with a Help to Buy: Equity Loan, so homeowners must be using this to move, rather than purchase an extra property. You also won’t be able to sublet this home, or go into a part exchange deal on your old home.

The Help to Buy: Equity Loan scheme is run by Government-appointed Help to Buy agents. They can help you with everything from general information about the scheme to guiding you through the whole purchase process.

*The government increased the upper limit for the equity loan it gives new home-buyers within Greater London from 20% to 40% to reflect property prices in the capital.

Help to Buy: Shared Ownership

If you are can’t quite afford a 100% mortgage on a home, Help to Buy: Shared Ownership gives you the chance to buy a share of your home (anywhere between 25% and 75% of the home’s value) and pay rent on the remaining share. You can buy bigger shares when you can afford to later.

You could buy a home through Help to Buy: Shared Ownership in England if your household earns £80,000 a year or less. The scheme is available to first-time buyers, those who previously owned a home but who can’t afford to buy a new one, or existing shared owners looking to move.

With the Help to Buy: Shared Ownership scheme you can buy a newly built home – or an existing one – through resale programmes from housing associations. You’ll need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership properties are always leasehold*.

To buy a home through a Help to Buy: Shared Ownership scheme, contact a Help to Buy agent.

Help to Buy is available on any property at the developments along the River Trent – so if you want to find out more, contact Steve at FHP Waterside Living on: 0115 841 1155.

*Leasehold means that you only own the property for a fixed period of time. You’ll have a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’. This tells you how many years you will own the property, after which ownership returns to the landlord.