In March of 2013, George Osborne announced the “Help to Buy” scheme in the UK. Today, many are wondering if this scheme is a good thing or if it should be avoided. In the paragraphs below, we are going to give you a little insight on “Help to Buy,” then you can decide if you want to take part in it or not.
Why Was the Scheme Created?
The scheme was created to help the lower income families be able to afford a home to live in. They can buy a home easily as they are only required to pay minor deposits. Mind you, only those families who have low income and backgrounds are able to take part in “Help to Buy.”
The family cannot choose just any home. The home they choose should not be worth more than 0.6 million pounds. The buyers will only be required to pay 5 percent deposit of the cost of the home – the remaining amount will be paid by banks and various mortgage institutions. With this 5 percent deposit, it will be easier for a qualified family to purchase a home.
Two Main Policies – The First Policy
There are 2 main policies that have been developed to help low income families. The first part of the scheme was launched in April of 2013 and will allow qualified families to receive up to 20 percent. For the first five years, the loan will be interest free. After those five years, the homeowner will be required to pay an annual fee that equals to 1.75 cent of the loan. The borrower can repay the loan any time they wish.
The Second Policy
The second part of the scheme will allow the borrower to deposit 5 percent of the properties price.
This is Not like the Equity Loan Scheme
The Help to buy Scheme is not like the equity loan scheme. With this scheme, the guarantee is being offered to all property purchases, not just on homes that have just been built.
Who is Eligible to Apply for this Scheme?
While many schemes are available to first-time buyers only, this scheme is available to everyone who would like to purchase property that is valued up to £600,000.
Those individuals who already have a home and are just wanting to buy a second home as a “vacation” place or to rent our will not be eligible for Help to Buy. Also, foreign buyers who have no credit history in the United Kingdom will be disqualified from the loan.
The loan is basically available to what is referred to as mortgage prisoners. Mortgage prisoners are those who cannot remortgage their home or cannot home because of a lack of money.
So there you have it, if you and your family need a little extra help getting a home, with the Help to Buy scheme, you can get the help you need and deserve and it doesn’t matter if you are a second or third homebuyer.