There are various initiatives, detailed below, which form the government’s “Help to Buy” scheme. The aim of which is to aid people with the build-up of deposit in order to buy a new home.

 

Help to Buy ISA

The Help to Buy Individual Savings Account(ISA) scheme involves receiving a government bonus on top of your own savings. This account is offered from a variety of banks and building societies across the UK to first time buyers on their first home

A starting deposit of anywhere up to £1,200 can be made followed by a maximum monthly amount of £200. The government will add a 25% contribution on top of this. However, you must save a minimum of £1,600 before you are eligible to claim the bonus.  The maximum amount the government can grant you is £3,000 which would mean saving £12,000 in total yourself first.

The bonus will have to be applied for via your solicitor/conveyancer nearer the time of completion of the property purchase.

If you have paid into a cash ISA this tax year, in order to open a Help to Buy: ISA, you will have to transfer your active cash ISA to a Help to Buy: ISA. You can transfer up to £1,200 of your active cash ISA balance into your Help to Buy: ISA.

Anything more than this should be moved into either a stocks and shares ISA, an Innovative Finance ISA, or a non-ISA account. However, the total amount saved must not exceed the annual subscription limit for ISAs.

Alternatively, some ISA managers offer portfolio ISAs which allow you to hold multiple ISA products within a cash ISA wrapper. You can still only subscribe to one cash ISA but it can be made up of one or more cash ISA products, including a Help to Buy: ISA. The standard cash ISA and Help to Buy: ISA allowance limits will still apply.

In order to qualify for the Help to Buy ISA Scheme you must:

  • be a UK resident and over 16 years old
  • intend to live in the property you are purchasing
  • buy a property worth up to £250,000 (£450,000 in London)
  • purchase the property with a mortgage
  • Have a valid national insurance number

Further details can be found via the government’s website at www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/

 

Help to Buy Equity Loan

This scheme is applicable to anybody purchasing a new-build property in England worth up to £600,000.  The scheme does not apply for properties that you intend to rent out and the property must be your only home. You must also be able to show that you can’t afford the home.

Under this scheme, the government will lend up to 20% of the value of the property – which would mean a deposit of 5% from yourself, and a mortgage for the remaining 75% of the price (up to 55% in London)

You will not pay any fees on the 20% loan for the first five years and a 1.75% interest rate will be charged each year subsequent to this. This will increase in line with the Retail Price Index (RPI) plus a further 1%.

The loan is repayable at any stage within 25 years or when you sell the home but the smallest repayment you can make is 10% of the market value of your home. You will owe back the same percentage borrowed – for example borrowing 20% will mean having to pay back 20% of the proceeds of the sale price, regardless of any changes in property value.

Due to current property prices the government has increased the loan limit from 20% to 40% for purchases in London boroughs.

Further details can be found via the government’s website at www.helptobuy.gov.uk/equity-loan/equity-loans/

 

 

Help to Buy (Scotland) Affordable New Build Scheme

This scheme is applicable to anybody purchasing a new-build property in Scotland worth up to £200,000 for purchases completing prior to March 2018, and £175,000 for purchases completing prior to March 2019.

Under this scheme, the Scottish government will lend up to 15% of the value of the property – which would mean a deposit of 5% from yourself, and a mortgage for the remaining 80% of the price. This stake can be repaid at any time and no interest will be incurred.

Further details can be found via the government’s website at  www.gov.scot/htb

 
Help to Buy (Wales) Scheme

This scheme is applicable to anybody purchasing a new-build property in Wales worth up to £300,000.

Under this scheme, the Welsh government will lend up to 20% of the value of the property – which would mean a deposit of 5% from yourself, and a mortgage for the remaining 75% of the price.

A £1 per month admin fee will be charged for the first five years and a 1.75% interest rate will be charged each year subsequent to this. This will increase in line with the Retail Price Index (RPI) plus a further 1%.

Further details can be found via the government’s website at www.helptobuywales.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.