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The Rundown: Help to Buy Schemes

Still living with your parents or maybe flat-sharing with mates? If the time has come for you to move on, you could be nearer to owning your own home than you think.

Help to Buy government schemes can help you take the first step to getting your own place.

Here’s the rundown on things you need to know.

Help to Buy – ISA

If you’re saving for your first home and use a Help to Buy ISA, the government will boost your savings by 25%. So, for every £200 you save, you’ll receive a bonus of £50. The maximum bonus you can receive is £3,000, which could boost your ISA savings from £12,000 to £15,000.

The Help to Buy Isa is available from a wide range of banks, building societies and credit unions. You need to have saved at least £1,600 before you can claim the minimum bonus of £400.

When you apply for your first home, your solicitor will apply for your government bonus, once you tell your bank, building society or credit union that you’re closing your Help to Buy ISA account.

Help to Buy – Equity Loan

With this, 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 won’t be charged loan fees on the 20% loan for the first five years of owning your home. In the sixth year, you’ll be charged 1.75%. After then, the fee rises by inflation plus 1% each year.

These fees do not go towards paying off the government loan. When you sell your home, or the mortgage is paid off, you repay the equity loan plus a share of any increase in the value.

Help to Buy – Shared Ownership

If you can’t quite afford the mortgage on 100% of a home, you have the chance to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. Later, you could buy bigger shares when you can afford to.

You can buy a home through Help to Buy Shared Ownership in England if:

  •    Your household earns £80,000 a year or less outside London
  •    Your household earns £90,000 a year or less in London
  •    You are a first-time buyer
  •    You used to own a home but can’t afford to buy one now
  •    You are an existing shared owner looking to move.

With Help to Buy Shared Ownership, 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.

Search the official Help to Buy government website to find out more details and check out important stuff like eligibility and affordability.