The Government’s Help-to-Buy scheme, launched in April this year has helped lots of people to buy new-build homes. When the scheme then entered its second phase in September, it extended to include homes that weren’t new builds too.Figures that cover from when the scheme began to as far as September 2013, show that more than 5,000 homes being bought within the space of six months, with statistics showing that 92 per cent of these homes were sold to first time buyers.
The scheme works by giving buyers a shared equity loan on homes worth up to £600,000. If they can put down five per cent of the cost of the home down as a deposit, then the government will loan them up to 20 per cent of the cost, with the remaining money being covered by the cost of a mortgage.
People who borrow the money are then not charged any fees for the next five years. During the sixth year they will then be charged 1.75 per cent of the loan value, which will then rise yearly. How much it will rise will be worked out according to the Retail Prices index, plus an additional one per cent.
As part of the second phase, the scheme was no longer restricted to new build homes. Also the Government will guarantee up to 15 per cent of a person’s homeloan to the lender rather than giving a loan to the buyer. The buyer will put down a five per cent deposit and the lender will offer the remaining 95 per cent as a mortgage. The lender can then call it in should the buyer default on payments.
This is helping first time buyers come on to the market, and it is also helping a lot of people move. However some critics are warning that it could increase the risk of a housing bubble in the UK where prices could rise to potentially unsustainable levels and then decline again.
There will also be a similar scheme mirroring this one launched in Wales in 2014 to help buyers with the cost of buying new build homes under £30,000 in the hope that it will increase demand for this kind of property and help to fuel more building projects.
A similar scheme also started in Scotland in September 2013.
If you’re wanting to buy a home or flat then you might need to take out a home loan to help you cover the cost of doing so. If you’re thinking about getting a home loan, then there are lots of companies out there who may be able to provide you with one.