How the Government help to buy scheme when moving home in Brailsford, Derbyshire could help you

The government have launched a £3.5 billion in shared equity new homes program called the help to buy scheme which allows for first time buyers to get on the first step of the property ladder.

How the Help to Buy Scheme Works

The new government help to buy scheme when moving home in Brailsford , Derbyshire  helps first time buyer to have the chance to own their own home with a deposit of just 5%. Providing the property is worth less than£600,000, your 5% deposit will attract 20% of the value of newly built homes from the government. Subject to finale design a mortgage guarantee scheme can also make £12 billion of government money available to help increase mortgage lending.

Although in the past tax incentives have been offered by the government supporting home buying  it has now been many years since UK taxpayers could benefit from mortgage interest tax relief.  George Osborne and his team have now elected to try out two different systems : an equity loan scheme and a mortgage guarantee.

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Equity loans

  • From 1st April 2013 a new scheme will run for three years. It is proposed to provide £3.5bn of additional investment.
  • The scheme will apply to new build properties only
  • You do not have to be a first time buyer all home buyers can apply
  • A minimum of 5% will be required
  • A government equity loan will lend up to 20%  of the value of the property. This can be re paid at any time or once the property is sold. For the first 5 years the loan is interest free.
  • The equity loan arrangement will only apply to home purchases of £600,000 or less.
  • By using this scheme the government will share ownership of the property so if the value of the property increases so does the equity loan.
  • You can apply if you currently rent a council or housing association property
  • If you are aged over 55 then you can get from another help to buy scheme called ” older peoples, shared ownership”. It works in the same way as the general scheme but only allows you to buy up to 75% of your home. Once you own 75% you will not have to pay rent on the remaining share.
  • You can also buy more shares in your home once you become the owner, this is known as stair casing.

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Mortgage guarantee 

  • From 1st January 2014 a mortgage guarantee scheme will run for three years. Buyers need to secure a mortgage from a lender who should be encouraged to offer low  deposit mortgages by the government guarantee.
  • Guarantees can apply to existing homes and new builds
  • A minimum 5% deposit will apply
  • A £600,000  maximum purchase applies
  • Both new building and the housing market are set to benefit from these schemes.
  • The house will be in your name so you can sell it at any time you may choose, at which point you will then have to pay back the equity loan. If you do not sell your home you will have to pay back the loan once you reach the end of your mortgage period. Whichever comes first.
  • You also have the option to pay back up to 20% of the equity loan without selling your home. If you wished to pay back the full amount you would need to speak to your lender and help to buy agent.

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