- First time buyers
The scheme begun helping first time buyers back in April 2013, and since there has been over 169,102 competitions to March 2018, of which 81 per cent of these were first time buyers and around 13,000 of these were based at London properties. The value of these properties is estimated at £42.23 billion, according to the Ministry of Housing, communities and Local authority.
- Equity Loan
The Help to Buy equity loan scheme supports those with a low deposit looking to get onto the property ladder. This is completed by combining a 5% deposit from the buyer, a government loan of up to 20% of the property value, which is interest free for the first five years, and a 75% mortgage. There is also a scheme for those looking to buy in London.
It is possible to re-mortgage with an equity loan in place, but it depends on the circumstance of the homeowner. There are a number of moving variables that will affect how easy it is to re-mortgage. This includes the mortgage loan itself, how much the property value has risen or fallen, whether the homeowner has any equity to put in and how much income they receive.
- Selling up
This follows the same process as any other property sale, however, at the point of sale, the homeowner will have to repay the equity loan in full to the Home and Communities Agency. The amount of paid back will be the same as the amount burrowed, unless you sold after the 5 year mark, then interest would start to occur onto off your equity loan.
The Help to Buy equity loan is not for everyone, and there are many different ways for first time buyers to get on the housing ladder, such as the shared ownership scheme. This allows people to buy a share of between 25% and 75% of a property. A mortgage will be paid on the share the homeowner owes, with a subsisted rent on the remainder being paid to the relevant housing association. Whilst shared ownership makes mortgages more accessible for those on a lower wage, homeowners still have to pay 100 per cent of the ground rent and service change on a property. Homeowners do have the option to buy a greater share of the property in the future, this is a process called stair-casing. However a stamp duty charge will be charged on the whole value of the property and will have to be paid once the shares equal or exceeds 80%.