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Knowing Which Help to Buy Scheme is Right for You

23 Feb 2017

Knowing Which Help to Buy Scheme is Right for You
Starting out on the housing ladder can be a difficult task with the rising costs of property in the UK.

But there is a way that you can get some help to buy your own property from various help to buy schemes. These are initiatives from the government that can help you make the right steps towards owning a property. But there isn’t just one scheme and it can be confusing as to what they actually entail. Help to buy schemes can make a real difference and can make the dream of owning your own home a reality.

We talk you through the help to buy schemes and discuss which one is right for you and the requirements for each.


Looking to Buy

If you’re looking to buy a home soon, then there are a number of schemes that can help you get a foot in the door. One of the most popular schemes is the Equity Loan Scheme, which is available to both first-time buyers and homeowners. It has proved popular because it only requires a smaller deposit than usual of just 5%. You can then borrow up to 20% from the government to cover some of the costs, leaving you with a mortgage of 75%. This is a great way to buy as it allows you to get on the property ladder much sooner than it would take to save a large deposit yourself. However, there are a few rules and regulations that you need to follow when taking this option.

  • The loan is only available on new builds in England with a value of up to £600,000
  • You must occupy the property and it must be your only property
  • You don’t pay anything on the 20% loan for the first five years in the home
  • You can sell your home at any time but you will have to pay back the loan at 20% of the sales price, which may be more than the value when you took out the loan


Wales and Scotland

If you are living in Wales or Scotland then don’t fear, you are not excluded and there are Help to Buy schemes for you too. There are still equity loan schemes available in both countries but the rules and regulations are slightly different for each. The Welsh equity loan scheme offers the same benefits as the one in England, but it is only available on new builds up to the value of £300,000. The Scottish scheme is slightly different, though. It is known as the Help to Buy Small Developers scheme or is also referred to as the Scottish equity loan scheme. The main difference is that instead of loaning the money, the Scottish government will take an equity stake of between 10% and 20% of the property. You will also only be able to use this scheme for properties up to the value of £250,000. You can repay the equity stake that the Scottish government own, but this will be based on the value of the property at the time of repayment.


Shared Ownership or Shared Equity

Another help to buy scheme that could get you on the property ladder is the shared ownership scheme. Although this may sound similar to shared equity, it is actually quite different. The shared ownership scheme is also known as a part buy/part rent scheme and involves purchasing part of a property while paying rent on the rest. The idea is that you will eventually buy the rest of the home through a process known as stair casing. It also means you will only need to take out a mortgage for as little as 25% while paying rent on the other 75%. The scheme is only open to first-time buyers and should be considered in the event that you can’t afford a large mortgage.


Buying in the Future?

If you are not looking to buy immediately then you might want to consider taking out a Help to Buy ISA scheme from the government. This is a great way to save as you are allowed to add up to £200 per month, to which the government will add a further £50. They will continue to do so up to a total value of £3000, which essentially means you are getting the extra money simply for saving. However, it will take 4 years to do so on the ISA and if you take the money out before this period, you will not be entitled to the government bonus. But if you are not looking to buy during this period, you could stand to gain £3000 extra towards your deposit.


Any decision that you make on purchasing a home, should be made with plenty of careful consideration and thought. You should do plenty of research to make sure that you are aware of all the costs and factors involved in buying a home. For more information, make sure you take a look at the government website and find out more about the various help to buy schemes.