Help to Buy: schemes update
The Help to Buy mortgage guarantee scheme opened on 8 October 2013 and was extended a few months later. The scheme allows qualifying buyers with a 5% deposit to apply for a mortgage on a home (old or new) worth up to £600,000. The scheme is open to first-time buyers as well as existing home owners (including those that are remortgaging).
Applicants to use the scheme will face the same checks as other borrowers and the scheme will run until 31 December 2016. Over the life of the scheme the Government will make available up to £12 billion of guarantees.
In the first 9 months of the scheme 18,564 mortgages were completed with the support of the scheme. The corresponding value of the guarantees was £388 million backing mortgages totalling almost £2.7bn. Interestingly, the use of the scheme was proportionally higher in the North West and East compared to London and the South East. The mean value of property purchased using the scheme was just over £153k compared to a national average house price of £265k.
A second scheme, known as the Help to Buy: equity loans are open to both first-time buyers and home movers on new-build homes in England with a purchase price up to £600,000. Under this scheme a home buyer needs to have a minimum 5% deposit and the Government will give a loan (with conditions) for a further 20% of the price. In the first 16 months of the scheme (to 31 July 2014), 29,829 properties were bought using the scheme. The majority of sales were to first-time buyers, representing 85% of total sales.
Chief Secretary to the Treasury, Danny Alexander, said:
‘I am delighted that over 48,000 people have already been helped onto or up the housing ladder as a result of the Help to Buy scheme. Today’s figures show that the government is delivering on its commitment to make home ownership a reality for as many households across the country as possible.’