What the 2013 Budget Means for Home Buyers
Help to Buy Equity Loan Scheme, Help to Buy Mortgage Guarantee and Right to Buy - What do the Budget changes mean
Aspirations of home ownership appear to have been the driving force behind a number of the announcements made in this years budget but it remains to be seen whether these have the desired effect and help boost the housing market.
- Help to Buy Equity Loan Scheme for home movers as well as first time buyers looking to buy a property for them to live in through a participating house builder or Home buy agent. You must have a 5% deposit and the house must not be worth more than £600,000 however there is no income cap. If approved the government will provide a loan of up to 20% of the value of the property which is interest free for the first five years. Then from year six onwards there is a fee of 1.75% which rises annually by the retail price index inflation plus 1%. You will be able to repay the loan at any time within the term of the mortgage or on the sale of the property. This scheme will be available for three years from 1st April 2013.
- Help to Buy Mortgage Guarantee is again available for home movers as well as first time buyers buying a property for them to live in but applies to all properties including existing properties not just new builds. The government hope that lenders will have an incentive to offer mortgages to those who have small deposits (5-20%) however there is no obligation and the lender’s criteria will need to be met in each case. If approved the government will give lenders the option to purchase a guarantee and then if the property is repossessed within the first seven years of the mortgage the government will cover a proportion of the losses suffered by the lender. Again the property value must not exceed £600,000. Further information is due to be announced but this scheme will be introduced in January 2014 and be available for three years.
- Right to Buy has been available for social housing tenants since the Housing Act 1985 but it is hoped that the reduced qualifying period of three years rather than five and the simplified application process will encourage people to invest in home ownership and boost the housing market as a knock on effect. As a result the government hope to be able to reduce housing debt and replace each home sold with another property available on an affordable rent.
Here at Wilkinson Woodward we have the experience and knowledge to help you to buy your new home whether this is utilising one of the above schemes or one of the existing shared ownership, shared equity or New Buy schemes already in existence.
Please call us 01422 339600 or 01484 483800.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.