Buying property is not easy – it’s a long-term commitment and probably one of the most important financial decisions you would ever make. Even if you are committed, it’s still difficult; people often don’t have enough savings to make the deposit for the mortgage, which most banks require. Luckily, there’s help – the government is trying to do its share to make it easier on people who struggle with the original down payment. Here, then, is what you should know about the Help to Buy government scheme.
What exactly is Help to Buy?
Help to Buy is a service provided by the government to first-time buyers. Those who are saving up for a deposit can expect £50 for every £200 they can provide themselves; in other words, the down payment for the mortgage will be supplemented by 25%. This is tax-free. There are maximum and minimum requirements because the government targets those who are willing but have trouble traveling up the property ladder.
What are the criteria?
There are some requirements the government has put in place, and these are:
- You must be 16 of age minimum, a first-time buyer and both living and buying property within the United Kingdom.
- The cost of the home must not exceed £250,000 (£400,000 if it is located in London). The actual value of the home is immaterial.
- The property is meant for residential purposes and cannot be used as a rental unit.
How does that bonus work?
The bonus is the amount of money the government supplies you with based on the savings you produce. There are fixed rates for this. It’s only meant for the deposit and will be transferred directly to the seller or broker – you’ll never see the actual cash yourself. This also means you will never receive any interest on the bonus you are forwarded.
You should know it’s not available for new homes, only existing ones. So if you are interested in buying property in Colchester, for example, it cannot be a new-build. The good news is that if you have a partner, both of you can get bonuses. Also worth noting is that the conveyancing solicitor is responsible for paying the bonus back.
For first-time buyers who wish to climb the property ladder, this is great news – making a deposit is hard enough as it is, and it’s good to know there’s a helping hand out there. There’s actually more good news: whilst the rates of the government now are quite good, they are expected to become even more competitive as the scheme beds in. With economic conditions as they are and with house prices very high, this is exactly the help many people are hoping for. If you would like expert assistance from a mortgage broker in Colchester and other nearby areas, you can rely on Flagstone.co.uk.