First Time Buyers: Help to Buy!

First Time Buyers: Help to Buy!

The topic of affordable homes never seems to be far off the political agenda. There has been a long term focus on the issues faced by first time buyers and the difficulties involved taking that first step on the property ladder. The greatest barrier is the financial cost involved in finding a deposit, conveyancing fees and affordable mortgages. But if you are fortunate enough to be able to buy, what help is out there?

What is a First Time Buyer

It might seem obvious but a First Time Buyer is someone who has not owned a home before either abroad or in the UK and is buying a home either for themselves or to rent out. The term does not apply to anyone buying a home along with someone who has previously owned one. The definition of a first time buyer should not be confused with eligibility on ‘help to buy’ which assists first time buyers in buying their first home to live in themselves. When looking at getting an online conveyancing quote make it clear you are a first time buyer.

What Help to Buy is available

The Government runs a scheme called Help to Buy which comes in a variety of forms. The purpose of the scheme is to help first-time buyers who are struggling to find a deposit of at least 10%. The bigger the deposit a buyer has the more access there is to a wider range of affordable mortgages. The scheme enables first time buyers to purchase a property with a deposit of just 5%.
Help through the scheme is only available to:
• first-time buyers (except those looking to rent out their property)
• existing homeowners looking to buy a New-Build property in England (a similar scheme operates in Wales)
It cannot be used to buy second homes, buy-to-let properties or homes above a certain price limit (250k outside London and 400k within), nor can you enter into a part-exchange deal on your old home. Your Conveyancer can help to advise you about this.

Help to Buy – Equity loan

This option is only available when buying a new-build home worth less than £600,000. It allows buyers to borrow up to 20% of the purchase price from the local government agent, where the buyer has at least a 5% deposit and a mortgage in place for the remaining 75%. The loan is interest-free for the first five years. After that the interest rate is 1.75 per cent on the amount outstanding with yearly increases of 1% on top of the Retail Prices Index ( a measure of the cost of goods and services).

London Help to Buy

It is well known that buying in London is even more difficult because of much higher house prices. To reflect that, the upper limit for the equity loan for qualifying buyers inn the Greater London area is increased from 20% to 40%. Again there is no interest on the amount loaned for five years but there is a limited pool of lenders who offer this scheme. These schemes also allow existing homeowners to buy a newly built property so are not restricted to first time buyers alone.

Help to Buy – Shared ownership

This element of the scheme allows a buyer to acquire a part share in a property. You can buy a home through Help to Buy – Shared Ownership in England if:
• your household earns £80,000 a year or less outside London, or your household earns £90,000 a year or less in London
• you are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.
You can buy a percentage of a home from a Landlord (typically the Local Authority council or a Housing Association) and then rent the remaining share from them at a reduced rate. The share can be anywhere between 25% and 75%, and this must be funded through a repayment mortgage or personal savings.
The benefit of this approach is that in the future, you then have the option to buy further shares in your home from the landlord. Some schemes only allow you to buy up to a certain maximum percentage (such as 80%), so you should check the particular scheme is suitable for your plans before going ahead. It applies to newly built or existing homes
HOLD – For people with disabilities
Home Ownership for People with Long-Term Disabilities (HOLD), can help you buy any home that’s for sale on a Shared Ownership basis if you have a long-term disability. You can only apply for HOLD if the properties available through the other home ownership schemes don’t meet your needs, eg you need a ground-floor property.

Help to Buy –  ISA

If you are saving to buy your first home, you can boost your savings by putting them into a Help to Buy ISA. With one of these accounts, the government gives you a 25% bonus on your savings up to a maximum bonus of £3,000.
The bonus has to be applied for by your Conveyancer so make sure that when you ask for an online conveyancing quote you mention you are part of this scheme.

Stamp Duty Exemption

If you are a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties worth up to £300,000. This means a saving of up to £5,000. Again this needs to be reflected in your online conveyancing quote.
Get an online conveyancing quote for a First Time Buyer

Now you are all set, the finances are in place and you know what help you can access. What next? This is where your Conveyancer comes in! What is a Conveyancer you may ask? Where do I find them? How do you choose one? These are all great questions to ask. Getting an online conveyancing quote is the easy way to go about it. Conveyancers are involved in the legal transfer of ownership form one person to another.
Sounds simple! However, don’t rely on your friends, your estate agent or well meaning family to choose one that is right for you. You need a Conveyancer that understands the issues facing first time buyers and who will guide you through the process in the best way. Remember too that you get what you pay for in this life. Cheap is not necessarily cheerful or quick or sensible when you are making that first big move into your first home.
All of the Conveyancers on The Express Conveyancing panel are experts in all aspects of the home buying process. They are quality assured, experts and on hand to help first time buyers take that important first step.

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