First-time buyers relying on input from the help-to-buy scheme must reserve a property before the end of October to avoid missing out on the government-backed loan. The original end date has been brought forward by two months, putting immense pressure on those still hoping to take advantage of government help.
What is the Help to Buy Scheme?
The help-to-buy scheme was originally launched in 2013 in the bid to boost the new-property market after the financial crisis. To begin with, the scheme was available in two parts – a mortgage guarantee, and an equity loan scheme. At the time, this was available to all buyers.
Fast forward to December 2020, the help-to-buy scheme changed and became available to first-time buyers only. This change was made to support young people looking to purchase their first new-build property through the help of a 5% mortgage rate and 5-year interest free loan.
The amount available was dependent on the region that the property was purchased in. For example, in London, buyers could take out a loan worth up to 40% of the total property price with a limit of of £600,000. Outside of London, the price cap ranged from between £186,000 and £437,600. These loans were interest-free for the first 5 years and could be repaid at any time. Any remaining amount had to be paid when the home was sold, or the mortgage was paid off.
When is the Help to Buy Scheme ending?
Homes England, who runs the scheme, announced that they’d brought the deadline forward on 20th May 2022. The news is available online but hasn’t been widely publicised and many young people are still unaware of the changes.
All applications will now close at 6pm on 31st October 2022 and the scheme will officially close on the 31st of March. All buyers must have legally exchanged by this date.
Is the Help to Buy Scheme being replaced?
What does this mean for first time buyers?
Unfortunately, the end of the equity loan scheme is ending at a time of financial uncertainty. Coupled with the increased costs of living, higher national insurance and the possibility of lowering student loan repayments is only going to make home ownership for first time buyers even more challenging.
If you need any advice on buying your first home, contact the team at Boothroyd & Co today. With decades of experience between us, we’re sure we can offer support to you if you need some direction.