What is Help to Buy? Time is ticking on the Help to Buy Scheme


Find out when Help to Buy ends, and why it's a good idea for first-time buyers looking for property

First time buyers often find themselves wondering if they can afford to make their first purchase. Size and location are two of the biggest factors when it comes to affordability, and for those buyers aiming to live in London, finding the right property, within budget, can feel like a challenge. However, when you take that step, and make that investment, the potential for growth is hugely rewarding. This is why joining the property ladder sooner rather than later is a goal for so many of us. The Help to Buy scheme is designed to help first time buyers achieve that goal!

The Help to Buy scheme offers better purchasing options, meaning first-time buyers may be able to take on a mortgage they believe is out of their price range because of the size or location. If you have a good salary but are concerned about a deposit, or want a more central location, but you are being pushed further out because of your budget, Help to Buy could benefit you. Don’t settle for that studio flat, using the Help to Buy scheme, you could start dreaming of a spacious one bedroom, maybe even two!

How does Help to Buy work?

If you qualify and have a 5% deposit Help to Buy allows a government funded equity loan of up to 40% of the purchase price for those purchasing in London, for other places in the country it is about 20%. The equity loan helps back you when taking out a mortgage, with more equity you will have access to better rates on your mortgage. There is no interest on the government loan for the first five years. After five years the interest goes up to 1.75% and then in line with RPI + 1%. Also, it is good to know that in London, you can take advantage of the Help to Buy scheme up to £600,000.

Here is an example:

You have your eye on this swanky apartment in Balham at £585,000

You have a deposit of £29,250 (5%)

The government would offer an equity loan of £234,000 (40%) which is interest free for 5 years.

This makes £263,250 of equity which is 45%

You would need a mortgage for 55%

Based on a 25-year term at 2.8% interest

You would pay £1,493 per month

Why should I use Help to Buy?

There is a phrase in the property industry, “the best day to buy was yesterday”, because prices in London are constantly on the rise due to the huge demand for property in one of the best cities in the world! The sooner you’re on the ladder the better. The Help to Buy scheme is designed to make purchasing your first property more achievable. There is no salary cap or deposit cap, so it is open for everyone that qualifies. It won’t be around for much longer so make use of it while you can. All Help To Buy purchases must be finalized by 31st March, 2023. Demand is going to be high in 2022 so act fast!

Things you should know

  • Help to Buy properties are new builds, registered through the scheme before they are put on the market, so you should know if the property is eligible for the scheme before you view it.
  • You cannot let a Help to Buy property, they are not for investment, you must live in it yourself.
  • When does Help to Buy end? The process of purchasing a Help to Buy property takes about 4 weeks so keep that in mind when purchasing closer to the end date. Remember, March 23, 2023.
  • Help to Buy properties are for first-time homeowners, you cannot have owned a property already.