The Help to Buy scheme has been a massive success for first-time buyers, prompting record numbers of people to get onto the housing ladder. But the government has announced that its Help to Buy schemes will end on 31st October 2022. Help to Buy is an initiative from the government that aims to make it easier for those looking to buy their first home (new build only). It’s a grand scheme that makes it much easier for those on low incomes or with smaller deposits to get onto the housing ladder. If you’re considering buying a new home and are interested in receiving more information about these schemes, read on. In this article, we have everything you need to know about the Help To Buy Scheme ending.
What does Help to Buy do?
The Help to Buy scheme offers low-deposit mortgages through the government’s equity loan and ISA schemes. The equity loan scheme allows you to buy a home with a smaller deposit of 5%. The government lends you the rest of the money to make up the 20% you are short for a deposit. You then pay this back over 25 years with an interest rate of 1.75%. The ISA scheme allows you to put away £1,200 per month, and you will receive a government top-up of £3,000 after three years. This is designed to help you save the 20% deposit you’ll need to put down on your home. The Help to Buy scheme also includes a mortgage guarantee scheme, which helps lenders to offer low-deposit mortgages to first-time buyers.
Help to Buy Equity Loan Scheme
The equity loan scheme has been hugely successful and is the most popular part of the Help to Buy scheme. You can use the equity loan scheme if you buy a new home. If you are purchasing a new build property, you will be offered a loan from the government to help towards the deposit. You will make monthly repayments towards the loan, just like any other kind of mortgage. After 25 years, you can pay off the loan in full or extend the payment period. This means you will have to pay the government back if the main homeowner defaults on the mortgage. You will be offered a second charge if you buy a flat or part of a shared ownership scheme. You will be offered a higher loan if you buy a home in a rural area.
Help to Buy ISA
The ISA scheme helps first-time buyers save up toward a deposit. You can save £1,200 monthly and receive a government bonus of £3,000 after three years. The bonus is equivalent to a 12% return on your savings. You can use the money saved towards a deposit for buying your first home. You can open a Help to Buy ISA account with any high street bank. It is worth noting that you can only open one account per financial institution. You will receive the government bonus when you buy a home worth less than £250,000 and have saved enough money for a 10% deposit. If you want to buy a home that is worth more than £250,000, you will not be able to receive the Help to Buy ISA bonus.
Help to Buy mortgage guarantee.
The mortgage guarantee scheme is designed to help first-time buyers find low-deposit mortgages. The government will back your mortgage if the lender is worried about the risk of you defaulting on your repayments. Borrowers who can make a 20% deposit can find a low-deposit mortgage through the scheme. This is an excellent option if you have saved enough money for a deposit but don’t have it in a savings account. The mortgage guarantee scheme is available to buyers using a Help to Buy equity loan to make their deposit. You can also use the scheme if you are a first-time buyer who can make a 10% deposit. You can use a mortgage guarantee to buy a home worth less than £250,000. If you want to buy a property worth more, you won’t be able to use the mortgage guarantee scheme.
Is the Help To Buy scheme ending?
The government has proposed to end the equity loan and ISA schemes so that it can use the money to build more affordable housing. The government announced that the Help to Buy equity loan scheme will end on 31st October 2022. At the same time, the Help to Buy ISA scheme will also close. However, it’s important to note that the Help to Buy mortgage guarantee scheme will be ending at the same time. Since the Help to Buy schemes have helped many first-time buyers to get a foot on the ladder, the government will likely replace them with something similar.
When Does the Help To Buy Scheme End?
The equity loan scheme will end on 31st October 2022. The ISA scheme will close on the same day. The government has proposed to end the Help to Buy mortgage guarantee scheme at the same time. However, whether it will replace the scheme with something similar has not been confirmed. If you want to buy a home before October 2022, you can still use the equity loan and ISA schemes. The schemes will no longer be available if you are looking to buy a home after this date.
How you can still buy a house with no deposit using the Help to Buy scheme
If you want to buy a home worth more than £250,000, you won’t be able to use the ISA scheme. However, you can still use the equity loan scheme. You can use the equity loan scheme if you have saved up a 10% deposit. If you have saved up a 10% deposit, you can use the equity loan scheme to buy a home worth up to £500,000. If you want to buy a home worth more than this amount, you won’t be able to use the equity loan scheme. You can use the Help to Buy mortgage guarantee scheme if you don’t have a deposit. If you have less than a 10% deposit saved, you can use the equity loan scheme to buy a home worth up to £250,000. If you want to buy a home worth more than £250,000, you won’t be able to use the equity loan scheme.
Final Words: Are There Any Alternatives?
The Help to Buy schemes have been hugely successful, encouraging first-time buyers to get a foot on the property ladder. However, the government has announced that its schemes will end on 31st October 2022. If you want to buy a home before this date, you can still use the equity loan and ISA schemes. If you are buying a home after October 2022, these schemes will no longer be available. The government has not yet confirmed whether it will replace the Help to Buy schemes with something similar. In the meantime, there are other ways to make it easier for first-time buyers to get onto the property ladder. For example, you could consider getting a guarantor mortgage. This type of mortgage you can apply for if you don’t have a large enough deposit. Alternatively, you could look at low-deposit mortgages if you can’t afford a down payment. These mortgages allow you to make payments for a higher interest rate. If you are looking to buy a home in the near future, make sure to keep an eye on the news. There will likely be many changes to the housing market in the coming months and years.
