Changes to Help to Buy: Equity Loan 2021

Image of Whitney Tully head of residential and conveyancing in stafford.

By Witney Tully

image of new builds, concept of changes to help to buy scheme

The Government has confirmed that the current Help to Buy: Equity Loan Scheme will be available to First Time Buyers and homeowners until March 2021. 

Help to buy changes: Am I still eligible?

Using the Help to Buy scheme, you can borrow up to 20% of your newly built home so that you will only require a 5% deposit and 75% mortgage. Since the launch of the scheme (1 April 2013 to 30 September 2019), 248,075 properties were bought with an equity loan; and First Time Buyers represented 81% of total purchases (Source: Ministry of Housing, Communities & Local Government). The changes due to commence from 31 March 2021 are said to “ensure the scheme reaches people who need it most” (Source: Help to Buy). Here is how it may affect you:

Who is Eligible from April 2021?

  • The Help to Buy Equity Loan Scheme will only be available for First Time Buyers. This means that if you have previously owned or had an interest in any other property in the world, you will not be eligible
  • There are now regional property price caps based on local markets. This means that there will be a maximum price to purchase your new build property using the scheme depending on the region. For example, the maximum price to purchase a newly built property with Help to Buy in the West Midlands will be £255,600.00.

Further information can be found at https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-statistics-april-2013-to-31-march-2019-england

Alternatives to using the Help to Buy Scheme:

If you are dreaming of purchasing a newly built property but will not qualify as a First Time Buyer, you may wish to consider other options.

  • Many top UK housebuilders will be able to agree a price for you to buy a new property and Part Exchange your existing property.
  • There is an option to Part Buy, Part Rent a property using a Shared Ownership Scheme. You could purchase a share (between 25%-75% of the property value) and pay rent on the rest. This may give you the opportunity to buy a home that would normally be outside of your affordability.
  • You could be eligible for a 95% mortgage.

Take time to consider whether these options might be right for you. 

How does this affect Buyers using the current Help to Buy Scheme?

The changes to be enforced from April 2021 will not affect current purchasers using the Help to Buy: Equity Loan Scheme. However, it will mean that the legal completion of the purchase must take place by 31 March 2021.

For further information contact Witney Tully on 01785 223440 or email witney.tully@orj.co.uk

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