UK Consumers Showing Confusion Over Help To Buy Scheme

Surveys indicate that a large number of UK consumers showing confusion over the Help to Buy scheme. While it was advertised as easy to understand, straightforward and suitable for many, the details have proven to be complicated and confusing. Let's take a look at the key facts you need to know.

What is Help to Buy?

Under the Help to Buy scheme, people looking to buy a newly built property can receive an equity loan from the government. It's possible to get this loan if you're a first-time buyer or an existing homeowner. However, the price has to be under £600,000. As long as you have a minimum of a 5% deposit, you can only borrow up to 20% (interest-free) for five years. If you're looking to buy property in London, you can borrow up to 40% interest-free.

How is Help to Buy Changing?

While Help to Buy will be extended up until at least 2023, you will only be able to get the loan if you are a first-time buyer looking to buy a newly built property. In addition, from 2021 there are price caps in particular areas, while have the potential to cut the value of properties that you can buy through the scheme.

Is Anyone Ineligible?

Some people can't access the Help to Buy Scheme. In particular, you can't use it to buy a property that you simply plan to let out to tenants, and you can't use the scheme to purchase a second house. You are also restricted to taking out a repayment mortgage, and you have to buy within the scheme's stated price limits.

How Equity Loans Work: The Basics

You must have a minimum of 5% of the sale price of your newly built property as a deposit. The government will then lend you
40% of the sale price if you live in London, or 20% if you live elsewhere in the UK. You subsequently borrow the remaining amount from a mortgage lender, and you must pay back the government's 20-40% after 25 years (or earlier if you happen to want to sell your property).

Quick Move Property Ltd trading as PropertyBuyer.co.uk

The Old Bank, 259 London Road, Hadleigh, Essex, SS7 2BN

T: 0800 246 1188
T: 01702 742 111

Important: Whilst we make every effort to complete in a quick and reasonable timescale, there are sometimes circumstances that might affect the actual completion date, and in extreme circumstances our ability to purchase. Any initial offer made is provisional and will only be confirmed once we are in receipt of a survey, and the searches and contracts are deemed satisfactory by our legal team. Other factors may affect our decision to purchase, or affect the price we eventually agree. Over recent years financial turbulence and market forces from both inside the UK, Europe and the rest of the world have caused extreme price fluctuations in the UK property market. Property law is such that until exchange of contracts takes place with the legal representatives the transaction is not legally binding. Prior to a legal exchange of contracts we can rescind the agreement at any time if we have any knowledge or we are advised that the property is not as initially described and/or anything comes to light that may have affected its value. Alternatively, the purchase price may be renegotiated by mutual consent. In the event we rescind the agreement then all legal aborted costs, disbursements and survey fees in the transaction will be met by us. We strongly advise not to commit to any expenditure or completion dates until legal exchange has taken place.