Free Money And More Help-to-Buy Incentives.

It equals a first time buyer bonanza says property journalist Sharon Dale.

Christmas is coming and first-time buyers have every reason to be merry and bright.

The Chancellor has just announced a range of measures to help young people get on to the property ladder. Not only that, he is also handing out money.

Yes, that’s right, free cash for first-time buyers who save for a deposit via the newly-launched Help to Buy Isa.
It all adds up to a big bonanza and it’s about time because would-be first-time buyers have had a tough time over the past decade. In the property boom, house prices spiralled out of reach for many. When prices fell in the recession, the credit crunch made it extremely difficult to get a 90 or 95 per cent mortgage.
 
So for those who may have missed the various announcements in the last Budget and in the recent Autumn Statement, here are details of the latest schemes and financial products that could help your first home.
 

Help to Buy Isa, or free money for first-time buyers.


If you’re saving for a home right now, you would be mad not to put your money into one of these accounts.

Under the scheme, first-time buyers can save up to £12,000 in the Isa and the government will top it up by 25 per cent. You can kick-start the Isa with a £1,000 lump sum if you have it and after that the maximum monthly amount you can save is £200, which attracts a £50 government top-up. The maximum bonus payable overall is £3,000. However, if a couple are saving together, they can open separate Help to Buy Isas, which could bring the total amount of “free money” to £6,000.
 
To qualify for the 25% extra, you need to have saved at least £1,600. There are no limits on how long an account can remain open but the government contribution to your mortgage deposit will only be paid to the lender when you buy your home. It can only be used on properties worth up to £250,000, or up to £450,000 in London. You are free to withdraw your own savings if you decide you don’t want to go ahead with the scheme.
 
The Help to Buy Isas are available from a number of banks and building societies, which are offering generous interest rates of up to 4%, which will add even more to your savings pot
 

Starter Homes


The government is also funding a Starter Homes programme, which should see developers offering first-time buyers a discount of 20% on the purchase price of new homes worth up to £250,000 in the regions and £450,000 in London. There are none yet but keep your eyes peeled.
 

Shared Ownership


The Chancellor has promised £4bn to housing associations and local authorities so they can build more new homes for shared ownership. He has just announced plans to launch a new Help to Buy shared ownership scheme for those with earnings less than £80,000. This is a good way of getting on to the ladder in high value areas, such as London and the South East.
 

Help to Buy scheme


The Autumn Statement revealed an extension to the Help to Buy equity loan scheme. It will now run for a year longer, until 2021. This scheme has been successful thanks to support by developers. It offers a 20 per cent loan on newly-built homes, which is interest free for the first five years. This leaves buyers to find just 5% of the asking price as a mortgage deposit.  First-time buyers in London will get extra help with an interest-free loan of 40%. Equity loans are available for first-time buyers and existing homeowners

Visit the Help To Buy website fo find out more about the Equity Loan.
 

Competition


And, finally, the government is trying to cool the buy-to-let market by making landlords pay an extra 3% in stamp duty. This should help first-time buyers who often find themselves in competition with landlords who are often cash buyers.
 

Help to Buy mortgage guarantee


With this scheme the government offers lenders the option to purchase a guarantee on mortgage loans so their risk is reduced if borrowers default on payments. It means home-buyers can access 95% loans more easily.
 
Article provided by Sharon Dale, property and interiors journalist and lifestyle bloggerShe has a passion for architecture, design, vintage furniture and Angie Lewin prints.

Publish date: 15/09/2017