In this post I won’t be professing the rights or wrongs of the new scheme but most people trying to get on the housing ladder or even moving up a rung will be pleased with the announcement of the Help to Buy and will be rushing to find out whether they meet the criteria and how the scheme will work.
There are two types (of help to buy scheme) both of which require a minimum deposit of 5% and are only available for owner occupation and therefore should exclude investment properties and the mortgages will only be repayment and not interest only. It is geared to individuals with a good credit history but may be struggling to raise enough of a deposit for a mortgage.
The scheme will be available to existing owners as well as first time buyers. Access to the scheme will be through participating builders and “HomeBuy” agents. The Chancellor has said that the scheme is still in a consultation process so bear in mind that it may be subject to change and revision.
1. Help to Buy Equity Loan Scheme
Available form 1 April 2013 the government will provide interest free equity loans of up to 20% of the value of a new build home up to the value of £600,000 that is only repayable once the home is sold.
2. Help to Buy – Mortgage Guarantee Scheme
From January 2014 the government will in effect guarantee a proportion of the mortgage to lenders with deposits of between 5 to 20%.
The treasury have already issued an infographic below which explains how the scheme will work. All and detailed information can be found on the Governments website at www.hm-treasury.gov.uk/10012.htm.
Click on the Infographic to view a larger version.