Help To Buy Home Ownership Schemes From gov.uk
What Help Is Available For Purchasing A New Home
Potential buyers can find it difficult to secure enough finance to purchase a property of their own. There are several Government schemes available to help you buy a home. Our comprehensive guide will help you decide which is the best one for you.
Help To Buy
If you have a small deposit, you might be eligible to use the Help to buy scheme:
- This scheme is available to first-time buyers and existing homeowners who buy a ‘new build’ property.
- The purchase price must not be over £600,000. You can borrow 20% of the purchase price interest-free for the first five years but you will need to have at least a 5% deposit.
- If you buy a home in London, you can borrow up to 40% of the purchase price.The scheme is available until 2021.
- You can’t use the scheme to buy a second home or a buy-to-let.
- You can only use the scheme if you take out a repayment mortgage.
- You can’t buy a property above the set price limits.
- In England, the scheme applies to homes costing £600,000 and under.
- In Northern Ireland there is a different equity loans scheme: you need at least a 5% deposit. The government lends you up to 20% and you borrow the rest from a mortgage lender, on a repayment basis.
- In Scotland the threshold depends on property value and when your application is completed. For applications completed on or before 31 March 2017, the maximum purchase price can’t exceed £230,000.
- In Wales, both the schemes apply to homes £300,000.
For advice on Purchasing a home through the Help to Buy scheme, contact one of our conveyancing solicitors now for a quote.
Help To Buy ISA
The Help to Buy ISA is a means of saving a deposit for your home in which the government will boost your savings by 25%. For every £200 you save the government will give you an extra £50, up to a maximum of £3,000.
In month 1 you can save a max of £1,200 and £200 per month thereafter.
The Help to Buy ISA is available to each first time buyer so if you are buying with a partner you can both apply for one, save in the same way and get up to the £3,000 bonus each.
You need to instruct your solicitor or conveyancer that you are using this scheme so they can apply for your bonus.
- The scheme is only available to first time buyers.
- You need to have saved £1,600 before you can claim the minimum government bonus of £400.
- Maximum bonus boost of £3,000 per person.
- The bonus cannot be used for the deposit or any indirect costs like conveyancing fees or quotes, legal fees & disbursements, estate agent fees or stamp duty. It has to be used in the consolidated funds at time of completion.
Lifetime ISA (LISA)
The Lifetime ISA or LISA can be used to save towards your home or as a long term savings account.
You can save up to £4,000 per year until the age of 50. The government will add a bonus of 25% up to a maximum of £1,000 per year.
Important: the money saved in a Lifetime ISA counts towards your annual ISA limit. This is currently £20,000 (2018-2019 tax year).
- You must be aged 18 or over but under 40 to open one.
- You cannot pay anymore into it after you turn 50 and you won’t earn any further 25% bonus. You will still earn interest on the account.
- You will be charged 25% to withdraw cash unless used for one of the following reasons:
- Buying your first home
- You are aged 60 or over
- You are terminally ill with less than 12 months to live
- When using the LISA for purchasing your first home the following must apply:
- The property costs less than £450,000
- You must have held the LISA for 12 months before you can buy the property
- You must use a conveyancer or solicitor as they will apply for the funds
- You must be buying with a mortgage
There are further restrictions if you have both a Help to Buy ISA and a Lifetime ISA.
Right to Buy/Acquire
Right to Aquire is a scheme offered in England and Wales. It is aimed at housing association tenants who don’t qualify for Right to Buy. The discounts are slightly smaller than right to buy.
Right to Buy is a scheme aimed at tenants in England, Wales and Northern Ireland who rent from their local council.
Right to Buy allows tenants who qualify, to buy their home at a discount. The size of the discount depends on where you live and the type of property. If you were living in a council home before it changed ownership to someone else like the housing association, you might be eligible to buy it under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
Usually, tenants should have rented from the public sector (local council or housing association) for three years prior to applying for one of thee schemes.
The three years can be non-consecutive. You may still qualify if you rented privately between times when you rented from the the local authority.
The Right to Buy scheme now includes housing association tenants in England.
This started in a few certain areas, then rolled out across the rest of England over the course of a year.
For advice on Purchasing a home through the right to Buy scheme and conveyancing fees, contact one of our conveyancing solicitors now.
Scotland: the Government plans to scrap the scheme for all council and housing association tenants in Scotland. There are other schemes available.
Northern Ireland: this scheme is called the House sales scheme. It is for tenants who rent from the Northern Ireland Housing Executive or a housing association.
This means you buy a share of a home from either the council or the housing association. You rent the remaining share.
You will need a mortgage to purchase your share. This can be between ¼ and 3/4 of the home’s value. You then pay reduced rent on the share you don’t own.
You can, in the future, choose to buy a bigger share in the property, even all of it.
Eligibility restrictions have lifted:
- Anyone earning less than £80,000 per household (outside London) or £90,000 (inside London) can use shared ownership.
- Military personnel get priority over others.
- The scheme will apply in England only.
For advice on Purchasing a home through shared ownership and conveyancing quotes, contact one of our conveyancing solicitors now.
Starter Home Scheme
This new government plan means 200,000 new build homes will be available to first-time buyers under 40 years old. You must have at least a 20% deposit. The discounted price for these homes should be priced no more than £250,000 outside London, and £450,000 in London.
Shared Equity Schemes
The Help to Buy Equity Loan Scheme is a short term government initiative. It is currently set to run until 2020. It is for first-time buyers AND homeowners looking to move into new build homes.
The Help to buy scheme provides an equity loan (30% increasing to 50% of the purchase price). It is for those who would otherwise need social housing.
You can repay the loan at any time prior to selling the property. If you do sell, the loan must be paid off immediately.
Scotland has two shared equity schemes – New Supply Shared Equity and Open Market Shared Equity.
New Supply Shared Equity (NSEE)
This means you can buy a new-build from a housing association or a housing co-operative. You be effectively buy a stake ranging between 60-80%, the remainder being funded by the Scottish Government.
You need to have a small deposit and a mortgage to buy your portion. The Scottish Government will have security on the property over proportion it has funded. You do not pay interest on the government portion. You repay the government upon selling the home. You can buy a bigger stake after two years. You can eventually own it all.
Now you’re up to speed with the schemes and options available to you it’s time to get to grips with all other aspects of buying a new home. Our experts are here to help; from conveyancing quotes right through to our moving house timeline we’ve got it covered.