Using Help to Buy to Buy Your First Home
Help to Buy has been around for some time now, but many people are still not sure whether they are eligible or whether it is right for them. Coupled with changes to the scheme that were introduced in 2021, we thought it would be helpful to outline some of the key facts.
So, what is Help to Buy?
Help to Buy is an Equity Loan Scheme to help first time buyers. Homes England will lend up to 20% of the value of your first home, and you (the buyer) must fund the rest of the cost with a minimum deposit of 5% and a mortgage.
The Help to Buy equity loan is interest free for the first five years, and this means your monthly outgoings will be lower for this period than if you had a mortgage for that amount. However, one important difference to remember is that with an equity loan, the amount you pay back is linked to the value of your home. So, you may pay back more or less than you borrowed through Help to Buy. This is not the case with a traditional mortgage.
Am I eligible?
Firstly, the Help to Buy scheme is available exclusively to new-build properties and is subject to regional price caps. In our region, this tends to be £261,900.
The Help to Buy Equity Loan Scheme was previously available to existing homeowners, however, following significant changes to the scheme in 2021, the current Help to Buy Equity Loan scheme is available only to first time buyers of new-build homes.
It is important to remember, that even if you are buying your first home, if you are buying a new home with someone who has owned a home in the past, you do not qualify to use the scheme.
What happens when I have to start repaying the equity loan?
For the first five years, the Help to Buy Equity Loan is interest-free. In year six of the loan, you will start to pay interest at 1.75% of the loan. This interest will rise each new tax year by the Consumer Price Index, plus 2%.
If you want to pay the loan down early, you can repay the equity loan in blocks of 10% of the value of your home or pay off the full amount at any time or when you sell your home.
How to apply?
If you decide to go ahead with a Stancliffe home, we can put you in touch with an Independent Financial Advisor, who will help you work out what you can afford. There is no requirement to use our recommended advisors and of course, if you have your own contacts then that is absolutely fine. Once you’ve checked your affordability, You will then need to submit the application to a Help to Buy agent. You can find a list at helptobuy.gov.uk.
Stancliffe Homes is currently developing a number of high quality homes at our Sherwood Fields development in Bolsover, Chesterfield. A range of 2 and 3 bedroom properties fall under the regional price cap for help to buy, and offer an excellent opportunity for first time buyers to purchase a high quality first home. We also deliver high quality new homes across Chesterfield, Derbyshire and the Peak District.