Help to Buy Schemes update
The Help to Buy mortgage guarantee scheme was launched on 8 October 2013 and was extended a few months later. The scheme allows qualifying buyers with a deposit of between 5% and 20% 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). Since 1 October 2014, no new loans with a loan-to-income ratio of 4.5 and above can be included in the scheme.
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 year of the scheme 30,269 mortgages were completed with the support of the scheme. The corresponding value of the guarantees was £644 million backing mortgages totalling almost £4.5bn. The use of the scheme was proportionally higher outside of London and the South East. The mean value of property purchased using the scheme was just over £155k compared to a national average house price of £273k.
A second scheme, known as the Help to Buy: equity loans scheme is open to both first-time buyers and home movers on new-build homes in England with a purchase price up to £600,000. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes. 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.
Chief Secretary to the Treasury, Danny Alexander, said:
‘Helping people onto the housing ladder or into a new home is a key part of our drive for a fairer society. Help to Buy also contributes our stronger economy, supporting house-building as Britain continues to benefit from a wide economic recovery.’