Posts tagged ‘first-time buyer’

Help to Buy Government loan of typically £40,000 given to 30 borrowers a day

An interest-free loan of almost £40,000 from the Government is being given to 30 borrowers a day to help them buy a new home.

EquityLoan

The loan is being issued under the Government’s Help to Buy equity loan scheme, launched in April.

The scheme helped 5,375 buyers during the first six months, according to the official figures issued today by Communities and Local Government.

Participants bought properties with an average value of £194,164, more than £20,000 higher than the average price of a home. The average equity loan was £38,703.

The majority of homes bought as part of the equity loan scheme were made by first-time buyers, totalling 92 per cent.

It means the Government issued £208m in equity loans.

The Help to Buy scheme was announced by the Chancellor in this year’s Budget and has two parts – equity loan and mortgage guarantee.

Under the equity loan scheme, the Government provides a loan of up to 20 per cent of the value of a new build home, interest free for the first five years. Borrowers provide a 5 per cent deposit and a mortgage of 75 per cent.

In the sixth year, borrowers will be charged a fee of 1.75 per cent of the loan’s value, after which the fee increases every year. The increase is based on the Retail Prices Index, plus 1 per cent.

The scheme is only available on new build properties.

Under the new mortgage guarantee scheme, the buyer also only needs a 5 per cent deposit.

The Government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender.

Help to Buy

November 21, 2013 at 1:40 PM Leave a comment

Common myths about Help to Buy dispelled

The launch of the latest phase of the Government’s Help to Buy scheme has generated a huge amount of interest from buyers. But an understanding of exactly how the scheme works remains sketchy, with borrowers wanting to know if they meet the criteria to apply.

Here, Zoopla answers some of the main questions home buyers are asking.

Further detail is also available on Zoopla’s Help to Buy page and please feel free to join us for a live webchat this Friday 10/25/2013 2:00pm – 3:00pm via blog.zoopla.co.uk/help-to-buy-live/

Help to Buy

Q: Is the scheme only for first-time buyers?

A: No, the mortgage guarantee scheme applies to first time buyers as well as those who have an existing home and are looking to move. However, the property must be your residential home and cannot be a buy-to-let property.

Q: I hear the mortgage guarantees are not being introduced until January 2014, can I move before then?

A: Yes, you can. The mortgage guarantees are not being introduced until January 2014, but it means lenders are now offering cheaper home loans as it is impossible to default on a mortgage before the end of the year.

Q: Can I only buy a new build property with the scheme?

A: No, the mortgage guarantees apply to both new build and existing properties up to the value of £600,000. The first phase of the Help to Buy scheme – known as equity loan – is for new build homes only.

Question mark in shape of houseQ: Can I buy a property regardless of my salary?

A: Essentially, a Help to Buy home loan with a mortgage guarantee is the same as a ‘normal’ mortgage, so the same terms and conditions apply between you and the lender. In most cases, lenders lend three or four times your annual salary.

Q: Am I restricted on the number of bedrooms?

A: No, there is no restriction on the number of rooms. However, there is a restriction on the value of the property, which is up to £600,000 under the mortgage guarantee scheme.

Q: Does the scheme apply to anyone living in the UK?

A: Yes, the mortgage guarantee is available to all UK citizens. It is in contrast to the equity loan phase of the scheme, which is available in England and is for new build homes costing up to £600,000. Scotland has its own equity loan scheme for properties up to £400,000, while Wales is expected to announce a version soon.

Q: Will different lenders offer separate Help to Buy mortgage rates under the scheme?

A: Yes, different lenders set their own terms and rates – although the Government-backed guarantee means the rates should be lower than they would have otherwise been for those buyers with a smaller deposit.

Q: Are the mortgage guarantees just an extension of the equity loan scheme scheme announced earlier this year?

A: No, the mortgage guarantee is a Government-backed guarantee only. There is no equity loan, as with the first phase of Help to Buy launched earlier this year.

Q: Which phase of the scheme is best for me?

A: One of the key differences between the two schemes is that buyers purchase 100 per cent of a property with the mortgage guarantee, whereas they purchase only 80 per cent under the equity loan scheme (where the Government provides an equity loan to cover the remaining 20 per cent). In addition, the equity loan scheme is only available on new build properties.

Got more questions? Join us for a live webchat this Friday 10/25/2013 2:00pm – 3:00pm via blog.zoopla.co.uk/help-to-buy-live/

The Help to Buy schemes are subject to terms and conditions. Please check eligibility criteria with your mortgage advisor or IFA.

October 22, 2013 at 2:44 PM 25 comments

Halifax Help to Buy mortgage rates unveiled

Britain’s biggest lender is expected to announce the interest rates on its Help to Buy mortgage rates next week.

House For sale

Halifax will offer rates under 5 per cent and accept applications by the end of the year, according to industry sources.

It will be welcome news to first-time buyers and homeowners who are looking to move with just a five per cent deposit.

As Zoopla revealed yesterday, borrowers can not only now apply for a mortgage using the new Help to Buy guarantees following the Government’s announcement at the beginning of this week, but they can also receive the mortgage money before the guarantees cut in on January 2.

It is impossible to default on the mortgage in the time between now and when the guarantees begin, so lenders are agreeing to hand over the cash before the deadline. If borrowers default after January 2, the lender will be covered by the mortgage guarantee.

A source told Zoopla: “We expect the rates to come in below 5 per cent and we expect applications to be accepted by Halifax before the end of next week.”

Under the new mortgage guarantee scheme, the buyer would only need a 5 per cent deposit.

The Government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender.

It follows the introduction of the first phase of Help to Buy – equity loans – earlier this year. Under this phase, the Government provides a loan of up to 20 per cent of the price of a property, with the borrowers providing a 5 per cent deposit and a mortgage of 75 per cent.

The scheme is proving popular with buyers as figures show registrations for new homes are up 25 per cent in a year.

Registrations for new homes climbed to almost 91,000 during the first eight months of this year, up from less than 73,000 during the same period a year earlier.

In particular, the three months from June this year – just two months after the scheme was introduced – saw a sharp increase compared to the previous year, up 15 per cent, according to insurers NHBC.

The latest news about Halifax comes as another high street lender reveals research about the biggest barriers to getting onto the housing ladder.

The survey by Santander suggested 16 per cent cite the most significant obstacle being not having enough money for a deposit.

October 4, 2013 at 10:06 AM Leave a comment

Merry Christmas … plus the property year in review

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

As 2011 draws to a close we’d like to wish you all a merry Christmas and a healthy and happy new year.

Property festive: We wish you a merry Christmas

Here at FindaProperty.com we’re also pausing to reflect on what’s been a very busy year on the property front and to pick out some of the top stories of the year.

First-time buyers

The endangered species of the property market, first-time buyers faced a tough year on the home front. Even though interest rates remained at historic lows and prices held steady or in many cases came down, those looking to take that first tentative step onto the property ladder and buy a home were rarely seen.

The Council of Mortgage Lenders (CML) reported there are now 200,000 FTBs a year compared with around 500,000 before 2008. And it’s a story of affordability. The CML says the average deposit for a first-buyer home is now 20%, which means finding a national average deposit of at least £25,000, or significantly more than that in London and some other cities.

Housing minister Grant Shapps recognised the problems faced by first-time buyers when he launched the goverment’s new housing strategy earlier this year, saying an “entire generation” have been blocked from the housing ladder and pledging to put this group at the centre of Government efforts to get the property market moving again.

Renting

The UK’s move towards being a nation of renters, rather than buyers, was probably the biggest single property story of the year.

FindaProperty.com research found the typical national monthly rent reached £890 in October – the highest average we’ve ever recorded for a home to rent- which accounted for 46 % of average monthly household net earnings. Renting was further thrust into the spotlight by homelessness charity Shelter and their disturbing landmark report into the affordability of the private rental sector.

Latest FindaProperty.com figures for December show rents are down slightly – partly down to a seasonal change, but this adjustment doesn’t change the fact that more of us are expecting to stay in our rented homes for longer. Recent FindaProperty.com research found 26 per cent of home searchers had “no issue” with renting long term.

House prices

House prices generally held steady in 2011. FindaProperty.com’s November asking price data showed the average price of a home at £215,385, 0.5% down on the previous month, but still 0.7% higher than a year ago. London’s status as an international city meant it operated as an independent market and the latest figures showed prices continued to increase there – by 0.7% last month, bringing the average price of a London home to £453,956.

December 15, 2011 at 3:03 PM Leave a comment

First-time buyer blog: Do we go over the 0% stamp duty threshold?

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

For first time buyers, any property under £250,000 is exempt from stamp duty tax. This is only if you have never owned a house or flat anywhere in the UK or the rest of the world. But it will only apply until March 24 2012.  Since we have begun our search for our first home, we have taken this for granted and restricted our budget to anything under £250,000.

It’s fair to say we have not been particularly successful in our home search to date. Yes, we were very cheeky in our first few offers – but the last property we saw really appealed to us. So we were a lot more realistic about our negotiations. Unfortunately, after talking to a roofer we were told that it needed a new roof. (as the majority of the Victorian terraces inReading do). Our final offer reflected the condition of the house. The last contact we had with the estate agent we were informed our offer was rejected, and the vendor had received a higher offer.

We felt quiet despondent at this point. We were very sorry to loose out on that last house, although we were not prepared to raise our final offer as we’d been told it needed at least £7,000 spending on it to improve the condition of the roof. As first time buyers, did we really want that hassle?

We are now looking at bigger properties, over the stamp duty threshold. Unfortunately, a good sized and good-condition property in Reading and surrounding areas is expensive. It’s an ideal location for commuters, as we are. Eventually, this will also be one of our biggest selling points when we come to move on.

We are weighing up the advantages and disadvantages of really stretching ourselves financially. So do we pay the 3% stamp duty tax for a property which is bigger, and is not “in need of modernisation”? We could be living in a larger property for longer, with more scope for improvements – this could mean less hassle and less expenditure in the long run with another potential move.  Or, do we take advantage of the 0% and use the money we would put towards stamp duty tax on a property which is cheaper, but needs some work doing to it?

Already this process has been quite stressful, it really does take up an awful lot of your time. We’re certainly in no rush to go through it all again any time soon.

September 9, 2011 at 11:40 AM Leave a comment

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