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What is the Help to Buy scheme and can I still apply? | The Sun

Mar 23, 2023

GETTING onto the property ladder isn't easy, but there are schemes to help you on the way.

And even though house prices have fallen for six months in a row, they still remain higher compared to last year.

The average house price stands at £257,406 according to Nationwide, down from £258,297 in January.

Figures from Moneyfacts show the average two-year fixed-rate mortgage was at 5.32% in March.

It means people are holding off from buying homes which in turn has led to house prices falling.

With a cost of living crisis, saving for a deposit can be unachievable while bills are spiralling.

The government's Help to Buy scheme is designed to make it easier for first-time buyers to save up the deposit typically needed to secure a home.

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We explain what the government's Help to Buy Scheme is, and if it is still available.

What is the Help to Buy Scheme?

The Help to Buy scheme is a government scheme that will give budding buyers an equity loan and allow them to put down a deposit of just 5%.

You can get up to 20% of the value of your property – or 40% if you live in London – under the scheme.

The loan is interest-free for the first five years – but budding buyers only have a matter of months to take advantage of it.

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To apply, you'll need to go through the Help to Buy agent in the area where you want to buy a home.

You can find one near you on the Homes England website.

Some disadvantages to using the scheme are that you can only buy a new build property to qualify for the loan.

That means those looking for a doer-upper to increase the value of their home can't access the scheme.New build homes can also be more expensive.

Is the Help to Buy scheme still open for applications?

The scheme is set to end by March 31, 2023 – the date when all legal completions need to be finalised by buyers.

But you would've needed to act a lot sooner if you want to secure a home through the scheme because of the time it can take to buy a property.

Unfortunately, new applications for Homes England, which oversees the scheme, should already have been made.

What other government schemes can help first-time buyers?

Shared ownership

Shared ownership lets first-time buyers purchase a portion of the equity in a property if they can't afford to take out a mortgage for the total value of the home.

You’ll co-own your home with a housing association, which will charge you rent on its portion of the property.

Buyers will find they'll likely need to buy a new-build home.

Buyers must purchase between 10% and 75% of the property to use the initiative, and they can then “staircase” – buy more shares in instalments – until they own 100% of it.

You can put down a deposit of just 5% using a shared ownership scheme.

You don't have as much freedom when it comes to selling up – if you own less than 100%, your housing association will get a set period of time to find a buyer.

That means you won’t be able to accept a higher offer from someone else.

Or, you might have to sell it back to the housing association instead of putting it on the market.

This means there isn't much competition to offer decent rates.

Help to Build

Last year saw the government unveil its Help to Build scheme to first-time buyers.

You'll be able to build your own home with just a 5% deposit.

The government can give you an equity loan based on the estimated costs to buy the plot of land and build your home.

The loan amount can be between 5% to 20%, and up to 40% in London.

It will make building your own home more affordable, as currently, you'll need a deposit worth around 25% of land and building costs.

But there are some downsides.

Building costs can often run away – which means you could go over budget and end up forking out much more than you want to.

It could also be challenging to find land to buy and build on – including the faff of getting planning permission and a mortgage.

Companies offering loans with 5% deposits

There are companies offering loans to first-time buyers with just 5% deposits to help them boost the home budget.

It works in a similar way to Help to Buy – but the key differences are that you can get a loan to cover up to 25% of the total value of a property, and it doesn’t have to be a new build.

You can repay your loan at any point – for example, you could choose to pay it back at all once when you sell up.

Ahauz is another company offering equity loans to buyers with a 5% deposit.

But a word of warning – alternative finance firms can often charge significant interest rates offering loans like these.

We spoke to one first-time buyer who is paying back more than double the interest he pays on his £30,000 Proportunity loan compared to his mortgage.

Plus, some lenders might not lend you a mortgage using an equity loan like this – so you might not get the best deal.



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Meanwhile, we spoke to first-time buyers Thomas Hamper and Kathryn Hicks who set themselves a saving challenge to buy their £600,000 first home.

And one couple from Lincolnshire saved up their £10,00 deposit with this simple money-saving trick.

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