With the Help To Buy: Mortgage Guarantee scheme closing at the end of 2016, many people have assumed that there is now no assistance from the Government for people looking to buy a home. This isn’t the case and there are still Help To Buy schemes in place that can help people find a place on the property ladder.
The Help To Buy Equity Loan sees the Government providing up to 20% of the cost of a newly built home. This means that the buyer only needs to find 5% for the deposit and then obtain a mortgage for 75% of the property price.
There are no loan fees to be paid on the 20% loan for the first five years of home ownership and this is something that will help many people to prepare their finances in an appropriate manner. Buyers in London are provided with additional support due to the inflated property prices in this part of the country. The upper limit for the equity loan element is 40% rather than 20%, which offsets the higher nature of property prices in the English capital.
This loan is available for first time buyers and people who already own property, so there is no initial barrier on who can look for this property. The criteria for this loan centres on the fact that the home must be a newly built property and it must be no dearer than £600,000. The buyer must not own any other property at the time of buying this property, they are not able to sublet the property and they are not allowed to arrange a part-exchange deal on an existing home.
Anyone who is looking to save for their first home knows the importance of the deposit but they will also be aware of the difficulty of saving up for the deposit. This is where the Help To Buy: ISA can have a positive impact. This is because the Government is willing to boost people’s savings by 25%, which means that for every £200 a buyer saves, they will receive a bonus of £50 from the Government. The maximum bonus available from the Government is £3,000.
This assistance is available for each first time buyer, not the buying household. This means that a couple who are both classed as first time buyers can both save, which means that they receive up to £6,000 from the Government.
It is possible to save up to £200 every month and it is possible to deposit a sum of up to £1,200 in the initial month of the ISA. The minimum bonus provided by the Government is £400 so there is a need to have saved at least £1,600 towards the deposit before being able to claim the bonus. As the maximum Government bonus stands at £3,000 per first time buyer, the amount required to be saved to meet this bonus is £12,000.
In order to receive the bonus, the solicitor or conveyancer working on the buyer’s behalf has to make an application for the bonus. They will receive it and put it towards the consolidated funds for the conclusion of the property transaction. It is not possible to use this bonus for any of the associated fees that arise when buying a home.
If you are looking to buy property, you will find that the Help To Buy schemes are well worth checking out. Depending on your circumstances or what sort of property you are looking to buy, there may be assistance available to you.
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