The end of the Help to Buy Mortgage Guarantee Scheme
3rd February 2017
The government has been dedicated to boosting home ownership, and keeping the British property market booming, for some time now. However, 31st December 2016 saw them end their popular Help to Buy Mortgage Guarantee Scheme.
This scheme was originally designed to allow lenders to offer a 95% mortgage, with the Government taking on some of the risk if the borrowers defaulted on their mortgage repayments. Since it was launched in 2013, it has helped somewhere in the region of 86,000 homeowners to get on the property ladder. Approximatley 10% of which, within the West Midlands alone.
A rather useful scheme it seems. So why stop it? Well, it had only been introduced on a temporary basis and it was always intended that the scheme would end in December 2016. However, noting how successful it had been, it was decided that something would be put in place as an alternative.
Whilst there hasn’t been another similar scheme introduced at the moment, there are still two remaining schemes that could help you to make that vital first purchase and get your foot onto the property ladder.
What other help is out there?
There are two main schemes designed to help those who want to purchase a home. The Help to Buy Equity Loan Scheme and the Help to Buy ISA Scheme.
The Equity Loan Scheme
The Equity Loan Scheme is when the Government will lend you up to 20% of the cost of a newly built home. This means that you only need a 5% deposit and a 75% mortgage in order to make up the rest of the purchase. You won’t be charged any loan fees for the first 5 years of owning your property.
Whilst some help to buy schemes are aimed at first time buyers, equity loans are open to everyone. The only requirement is that the property is a new build and it costs less than £600,000. You should also be aware that you cannot sublet your home, or enter a part exchange deal on your old your home and you must not own any other properties when purchasing your new build.
The ISA Scheme
Saving to buy your first home can be difficult. However, you can make it all the easier for yourself by saving money with a Help to Buy: Individual Savings Account. By opening one of these ISA's, you will receive a 25% Government boost to the amount that you have with the maximum bonus you can receive being capped at £3,000.
What is great about these accounts is that they are open to each first-time buyer and not the household as a whole. This means that if you are buying with your partner, then you can receive a total of up to £6,000. A big help when you are trying to get together that all important deposit.
So now you know, for all the first time buyers in and around Birmingham- and throughout the UK - looking to purchase a property, there is a helping hand out there.
Why not research more about which scheme is right for you and see if it can help you to go from dreaming of your own home, to living in one?
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