The new government has brought many changes, but one of the most impactful for those looking to get onto the property ladder is the end of the Help to Buy scheme. It seems like bad news for anyone hoping to get government support with buying a new home- but it is worth remembering that the scheme was actually introduced to protect lenders following the credit crunch, rather than an entirely altruistic effort to help new buyers.
Introduced in 2013, The Help to Buy Guarantee Scheme encouraged lenders to offer 95% loans again-something that had become virtually non-existent following the credit crunch of 2007. London Bridge estate agent Williams Lynch explains, “It resulted in a greater number of lenders being able to offer higher loan-to-value mortgages through the banks, making it easier for new buyers who didn’t have a huge deposit.”
Although it’s a disappointment to many, it shouldn’t come as a surprise- when the scheme was introduced it was also announced that it would be ending in 2016, so the government haven’t actually backed down on this particular promise. Belgravia estate agent, Best Gapp points out, all is not lost- “There are still some great options available if you’re thinking about stepping your first food on the property ladder”:
Help to Buy ISA /Help to Buy Equity Loan
These schemes will still continue to exist after the official Government scheme ends in December- so all’s not lost if you’re lacking a substantial deposit.
Help to Buy closure
People who have been saving towards buying a property in the future can still receive up to 25% towards a deposit via the Help to Buy closure scheme. Savings of up to £12,000 that have already been stored in a Help to Buy ISA will be topped up, and if two or more parties have been saving you can combine the money from each individual account.
The Help to Buy Equity Loan allows you to purchase a new build property with a 20% interest free loan for a period of up to five years. This also provides new buyers with the chance to get onto the ladder with a 5% deposit whilst taking advantage of an interest free loan for the first few years.
Shared Ownership schemes have been popular for several years, even in London, where it is becoming increasingly difficult for new buyers to purchase their first property. These schemes allow you to buy part of a property and rent the rest, and are available on both new builds (through housing associations) and existing homes.
Search for a bargain
Sometimes you have to get a little creative when it comes to finding your first home. Attending property auctions is a good way to find discounted homes, and it’s always worth considering areas that are a little outside your comfort zone or area of preference. There are some real gems to be found if you look a little further afield. Particularly in the South East there are some exciting transport developments that will make commuting to London faster, easier and more comfortable than ever before. Newington Green estate agent, M&M Property suggests it’s worth considering properties that need a little TLC-“ Also consider properties that have been on the market for a while and need a little extra work- finding a bargain can pay dividends in the long run.”
Although the end of the Help to Buy scheme is near, it doesn’t have to mean the end of opportunities- just do your research and you still should be able to access the support you need.