The Help to Buy scheme is providing a welcome boost to the new homes market and construction industry with developers across the area reporting a strong take up of the government initiative.
Craig Cassidy, area director at Connells, one of the country’s leading sellers of new homes, comments: “Since the scheme was announced on April 1 we have seen a significant rise in enquiries from both first time buyers and second steppers who recognise that it offers them a unique opportunity to get on the ladder or trade up to a larger home.
“The government has pumped millions of pounds of taxpayers’ money into this initiative to help buyers who would otherwise struggle to raise enough deposit to buy a property through a traditional mortgage.”
Unlike previous schemes, Help to Buy is available to all purchasers, not just first time buyers, of new homes up to the value of £600,000 and there is no restriction on the maximum amount someone can earn to be eligible.
Borrowers need to raise a deposit of just five per cent of the value of the property they want to buy and they can borrow a further 20 per cent in the form of an equity loan from the government. The remaining 75% of the balance is paid for with a conventional mortgage. The loan is interest free for the first five years after which there is a 1.75 per cent annual charge which increases each year by the RPI rate of inflation plus one per cent.
The state-backed loan is available for up to 25 years and must be repaid when the property is sold but can be repaid earlier.
“This is an amazing opportunity for anyone who can afford the mortgage payments but who would struggle to raise the substantial deposit required by most lenders to access their best deals,” says Craig.
“It may also mean that purchasers will be able to buy a larger new home than they thought they could afford!”
Since the economic crisis began many people have found themselves ‘trapped’ in a property which has become too small for them as their family has grown.
Although they may well be earning enough to meet monthly mortgage payments, they may have limited equity in their property and rising day to day living costs have made it difficult to put aside extra funds to enable them to move to a larger property.
Similarly aspiring first time buyers who are currently renting often find that, after paying their monthly rent, they cannot afford to save enough deposit to obtain a conventional mortgage on a home of their own. Ironically, with interest rates at a historically low level, monthly rental charges are often the same or even more than they would have to pay in mortgage repayments.
“These are the sort of people who could really benefit from Help to Buy,” says Craig. “However most people simply do not know enough about it – or possibly think it’s too good to be true – so, to try and spread the word and help people understand it better, Connells are running a Help To Buy week from June 21 in all our offices in the area.
“Help to Buy is a terrific scheme which has already proved to be extremely popular at the many new homes sites we are selling throughout the country and take-up will soar as more people become aware of it,.
“While funds are available today, no-one can say with certainty how long they will last so it really is a case of act now or lose out.”