Incentives that could help you as a buyer

There are different incentives and schemes out there which can help you financially as a home mover or first-time buyer. Some are government backed and some aren’t but if you fit the criteria, it could benefit you quite substantially.

Help to Buy Equity Scheme

This scheme is ending March 2023 and it is not being replaced with a similar Government Backed scheme.

To meet all the criteria to purchase a property, using the Help to Buy scheme, you need to:

  • Be a first-time buyer
  • Be over 18
  • Have at least 5% deposit of your own

Under the Help to Buy Scheme, the Government will provide an “Equity Loan” of up to 20% of the property value (40% if you live in London), subject to the regional property value limits. It is only available to first time buyers buying a new build property. The first-time buyer does require at least a 5% deposit. After 5-years you have the option to repay the Equity Loan, in full or in part (“staircasing”). At the time when you look to make repayment of the Equity Loan value, this is based upon 20% of the property value at that time, NOT the original purchase price, so if property values have increased since the Equity Loan was granted its value will be based upon 20% of this higher property value.

This scheme has been running since 2013 it has helped thousands of people onto the property ladder, so 2022 will be your last chance to take advantage of this particular scheme. Whilst there is no specific date for the scheme ending as such, house builders have been advised that December 2022 is currently the last date that property “reservation” can be secured, and only if properties are to be confirmed to be fully built/completed with 9 months of reservation. Further updates are likely to be issued in this regard in the months ahead, so these dates may change. So, if you are considering the Help to Buy scheme to finance your first house purchase, then you need to be progressing matters at the earliest opportunity.

First Homes Scheme

There is a new Government scheme coming next year. We already have a couple of lenders who have said they will accept applicants to support people using this scheme.

The First Home scheme enables you to buy a property at a discounted price. The minimum is 30% but it can go up to 50% in certain circumstances.

Criteria:

  • Must be a new build house which has been built under the scheme
  • You must pass this discount on when selling the house in the future
  • Only for first time buyers, however the council can make exceptions
  • Maximum client income of £80k (or £90k in London)
  • Maximum purchase price – after discount – is £250k (or £420k in London)

Lenders also have additional criteria on top of the list above and they are all different. This scheme launches in 2023 and more lenders are anticipated to start accepting applications. So, if you would like to find out more information or start planning to purchase next year or onwards, please contact us.

Green Mortgages

Lenders offer green mortgages to people who have a property with an EPC (energy performance certificate) with a rating of A or B. Typically, the rates for green mortgages are slightly better.

Lifetime ISA

You can still open Lifetime ISAs (LISAs) and we do recommend you do so if you can. If you are a first-time buyer you can use this for your first home purchase, but you can also use it towards a pension fund.

  • £4,000 max contribution per annum (tax year)
  • 25% bonus paid on contribution monthly (max £1,000 per tax year)
  • Contributions to the Lifetime ISA fall within the annual ISA contribution allowance of £20,000 (per tax year)
  • To open a Lifetime ISA, you must be between 18 and 40 years of age
  • You can pay into a Lifetime ISA until you reach 50 years of age
  • Only First Time Buyers can use a Lifetime ISA to buy a first home. That means you can’t own or have owned a home in the UK or anywhere else in the world.
  • The Lifetime ISA must be open for 12 months before you can use the funds (and bonus’) to purchase your first property.
  • The maximum property purchase price for using a Lifetime ISA is £450,000, whether inside or outside London.
  • The property you are purchasing using your Lifetime ISA, must be a place for you to live in, not for somewhere you into to rent out or use as a holiday home.
  • The mortgage taken out must be on a traditional Capital Repayment basis.For more details of using a LISA for your pension, please visit the government’s website at https://www.gov.uk/lifetime-isa

Help to Buy ISA

These have now been withdrawn from sale, as of 30th November 2019. People who have opened a Help to Buy ISA can continue to save into these until 30th November 2030. The bonus on the accumulated funds within a Help to Buy ISA must be claimed before 1st December 2030 towards a qualifying property purchase.

For those who have already got a Help to Buy ISA, the maximum you can put in is £200 a month, which works out as £2,400 a year. The government will add 25% of the total funds deposited, giving you a maximum annual bonus of £600 a year. You will not see the bonus added annually, it will be added at the end once the account is closed, and funds withdrawn for your first home deposit.

If you have any questions about any of the above incentives, schemes or think that you would be eligible for any of these, please contact us and we can discuss how you can move forward or answer any queries.

Call us today to discuss your needs or send us your enquiry

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