Four in 10 of all new home buyers benefiting from Help-to-Buy
According to reports from housebuilders, four in 10 of all new home buyers are benefiting from the government’s rebooted Help-to-Buy scheme.
The scheme allows first time buyers to get on the housing ladder by offering a five per cent deposit on properties with a value no greater than £600,000. The government provides 40 per cent of the asking price with an equity loan, leaving the buyer to arrange a 55 per cent mortgage. The remainder is covered by the deposit.
For instance, the breakdown of a property valued at £120,000 would be as follows:
· Government loan – £48,000
· Mortgage – £66,000
· Deposit – £6,000
The relatively lower rate on the deposit has offered people on average incomes the opportunity to buy a home and get themselves on the property ladder.
For the first five years of ownership, there is no interest to pay on the government-backed equity loan. Afterwards a charge of 1.75 per cent is levied, which rises in line with the retail price index (RPI) plus one per cent.
The loan is repayable within 25 years of the home being sold.
Councillor for the district of Weymouth and Portland, Gill Taylor, commented on the uptake of the scheme in her region: “The help to buy scheme provides a great opportunity for an individual or family to buy a home that might ordinarily have been out of reach.
“We are in a low wage area so it is difficult for residents to save enough to buy a home.
“Schemes like this are really welcomed, however we need more house building to enable an increased uptake in the borough.”