September 2016: Stop Press: The Government have announced that the Mortgage Guarantee Scheme which forms part of the Government’s Help to Buy portfolio will close to new mortgage applications on 31 December 2016. The Help to Buy Equity Loan Scheme (as detailed below) and the Help to Buy ISA (available from most Banks and Building Societies) are not affected by this closure.

In a Nutshell: The Help to Buy Equity Loan Scheme is a Government run scheme whereby the Homes and Communities Agency lend you up to 20% of the cost of buying a newly built home, so that you will only need to find a 5% deposit and then raise a 75% mortgage to make up the balance of the property price.

You will not be charged loan fees or interest on the 20% loan for the first five years of owning your home. From year 6 onwards you are required to pay interest until the date that you repay the loan.

You will not be permitted to sublet your home or enter a part exchange deal on your old home.  You must not own any other property at the time that you buy the new property with the aid of the Help to Buy equity loan.

To reflect current property prices in London, from 1st February 2016 the Government increased the Help to Buy: Equity Loan scheme’s upper loan limited from 20% to 40% for buyers in all London Boroughs.

Some interesting facts and figures :

  • Help to Buy has proved to be quite popular as a means of getting a foot on the property ladder.  To 31st March 2016 it is stated that 81,014 properties were purchased with the support of the Help to Buy: Equity Loan scheme. The majority of these were to first time buyers (81%).
  • The average purchase price was £222,830.00
  • The top 6 local authorities in terms of completed sales are Wiltshire (1,355), Leeds (1,235), Central Bedfordshire (1,177), County Durham (1,081), Wakefield (1,000) and Bedford (995)
  • For Colchester the recorded total equity loans to 31st March 2016 is 655 and for Tendring the figure is 145.  This is the total of equity loans taken since the scheme started on 31st March 2013.

To see quarterly figures you may like to visit the following link here.

At Thompson Smith and Puxon we have a team of experts who have worked with Help to Buy clients since the scheme was launched in March 2016.  Please contact Catie Spink on catie.spink@tsplegal.com or 01255 254258