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Help to Buy Schemes in England

Help to buy

Buying a home can be the biggest financial commitment you will ever make. With the average house price at £256,405(according to the UK house price index) though it can sometimes feel out of reach, which is why the Government identified the need for Help to Buy schemes.

The Government want to help more people own their own home, turning generation rent into generation buy.

Several schemes have been made available through Help to Buy since 2013. They are under constant review hence the recent announcements of the mortgage guarantee and help to build schemes.

These schemes vary depending on your circumstances offering crucial financial assistance to get onto the property ladder.

But what Help to Buy schemes are there and who is eligible for them. This article takes a look.

What Help to Buy schemes are available?

As we said, there are a number of Help to Buy schemes available based on a range of circumstances.

NOTE: Help to Buy schemes do vary depending on whether you live in England, Ireland, Scotland or Wales. In this article, we are focusing on those available in England.

To see what schemes are available elsewhere:

Equity Loan

What is it: The Equity Loan scheme offers a government loan for a 20% equity share (until the loan is re-paid) on top of your 5% deposit.

Who is it for: The scheme is only available to first-time buyers who are unable to access a mortgage due to deposit requirements.

Eligibility criteria: Criteria for the scheme means you cannot have owned a home or land previously. It’s also only available to buy a new build property from a registered home builder.

Closing date: The scheme is currently open until March 2023.

Mortgage Guarantee Scheme

What is it: Announced in the 2021 budget, this Help to Buy scheme looks to increase the availability of 5% deposit mortgages. The government is providing lenders (who are signed up to the scheme) with a 20% guarantee on mortgages where the borrower has a 5% deposit. This means that the risk to a lender is reduced as the government would compensate them for a portion of losses in the event of repossession.

Who is it for: It’s available not only to first-time buyers but to existing homeowners too.

Closing date: As the scheme is a response to the effects caused by the COVID-19 pandemic, the scheme is only available until December 2022.

Shared Ownership

What is it: The shared ownership scheme offers you the chance to buy a home if you can’t afford to buy 100% of it. It simply means that you purchase a proportion of the property, between 10% and 75%, and pay rent on the rest. It also gives you the option to purchase bigger shares in the property later on.

Who is it for: You don’t have to be a first-time buyer, you can be eligible if you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.

Eligibility criteria: There are caps on household income, £80,000 a year or £90,000 a year in London. What’s more, is purchases can be made on new builds or existing homes on resale programmes with housing associations.

Help to Buy ISA/Lifetime ISA

What is it: The Help to Buy ISA allows you to save and earn a government boost of 25% of those savings. The most current Lifetime ISA (LISA) option is intended for long term savings to either buy a home or for later in life but also offers a 25% bonus for all new payments.

Who is it for: Both ISA schemes are only available to first-time buyers.

Eligibility criteria: With the Help to Buy ISA, when you come to buy your home limitations on it mean you must be a first-time buyer purchasing a property up to £250,000. It must also be the only home you own and you intend to live in it.

LISA accounts are only open for those aged 18-39. Limits are also in place meaning you can only save £4,000 a year and use it towards buying your first home up to the value of £450,000.

Closing date: Whilst the Help to Buy ISA closed to new applicants in November 2019, those who took one out you can still save into the account until November 2029 and claim your 25% bonus until November 2030.

Right to Buy

What is it: The scheme offers a discount on your property of up to £84,600 outside London and £112,800 in London.

Who is it for: The Right to Buy scheme applies exclusively to council or housing association tenants in England who might wish to buy their home.

Eligibility criteria: To be eligible you need to be a secure tenant who has been a public sector tenant for at least 3 years.

Help to Build

Whilst this scheme is currently being finalised the government are setting it up to help remove the barriers and make self build homes an affordable realistic option. Details of the scheme will be announced in late summer, so we’ll be keeping a close eye on it to update you.

Who are Help to Buy schemes available to?

As you can see Help to Buy schemes are available to a variety of people. However, the majority of schemes available are for first-time buyers only, with the intention of getting more people onto the property ladder.

Each scheme will have its own eligibility requirements and you’ll be assessed on an individual basis. However, you’ll need to remember that on top of this you need to meet individual lenders criteria on affordability and credit checks.

Which scheme is best?

Which scheme is best very much depends on your individual circumstances. What’s best for one person won’t be right for another.

Speaking with an appropriate broker about which scheme would work best for you and what you would be eligible for is a good place to start. Information is also available via the Government website ‘Own You Home‘.

You’ll also want to look at which Help to Buy mortgage is best for you by assessing who will offer you the best deal. To do this you’ll need to start by looking at which lenders participate in the scheme you’re looking to purchase through.

Speaking with a broker who has expertise in this area and can offer you advice on your options as well as search for suitable lenders within the whole of market and can be time and cost-saving.

Contact us at Online Mortgage Guru on 0345 3669799 or email us via info@theonlinemortgageguru.co.uk and we will put you in touch with a suitable specialist to handle your enquiry.

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