Are you struggling to navigate the complexities of buying your first home or a new-build? Are you looking for an affordable way to step onto the property ladder? Look no further! In this blog post, titled “What exactly is the Save to Buy Scheme? A guide for first-time buyers,” we will explore the “Help to Buy Equity Loan” new scheme, a government initiative designed to assist first-time buyers in purchasing their dream home.
The “Help to Buy Equity Loan” scheme provides financial support and low interest rate to eligible individuals who are keen to buy a new build property. With this scheme, you can secure a mortgage with just a 5% deposit, making it more accessible for those struggling to save for a larger deposit. The government then lends you up to 20% (or 40% in London) of the purchase price as an equity loan, interest-free for the first five years. This loan, in combination with your mortgage, allows you to buy a home with a smaller upfront financial commitment.
If you choose to participate in the “Help to Buy Equity Loan” scheme, you’ll have the opportunity to purchase a new-build property from a registered housebuilder. These new-build properties are often designed to meet modern standards and offer the benefits of a brand-new home, such as energy efficiency and contemporary features. It’s an excellent option for those who value the advantages of owning a new build property.
Another option worth exploring is the “Shared Ownership” scheme. With this scheme, you can buy a share of a property and pay rent on the remaining share. It’s a great way to gradually increase your ownership over time, providing an alternative route to getting on the property ladder. This scheme allows you to enter the housing market with a smaller initial investment, giving you the opportunity to save for a deposit while you repay the portion you don’t own.
So, whether you’re aiming to save for a deposit, take advantage of an interest-free loan, or buy a share in a new build property, the “Help to Buy Equity Loan” scheme and “Shared Ownership” scheme are excellent options to consider. In this blog post, we will delve deeper into these schemes and unravel the benefits and intricacies of each, empowering you as a first-time buyer. Together, we’ll help you understand the steps you need to take to achieve your dream of owning your first home and understanding property value in 2023 and beyond.
Saving money on a deposit: Mission (nearly) Impossible
Up until now, the two options for saving money for a down payment on the property were to eliminate any unneeded or low-priority spending or wait for a bonus. Another smart strategy would be to open separate, high-interest savings accounts just for the deposit, making sure the money isn’t easily accessible and that you won’t need it for anything else before making the purchase.
Saving for a down payment on a home could be a goal that is attainable with commitment, focus, and wise budgeting. But is there a simpler approach?
What is the Save to Buy Scheme?
The Save to Buyo program was created by UK developer Fairview Homes to assist first-time homebuyers in saving money for a deposit while also residing in the home they intend to purchase. The programme makes it simpler for purchasers to accumulate savings and ultimately buy their own homes.
With the new programme, first-time buyers may live rent-free in their homes while having their monthly contributions applied to their down payment instead of a landlord.
The government-backed Help to Buy programme, which had been in place since 2013, came to an end, leaving a hole that was filled by the Save to Buy programme. This programme had assisted thousands of first-time homebuyers in getting on the property ladder.
Who is eligible for the Help to Buy scheme?
You must be at least 18 years old and have never owned a home before in order to be eligible for the Save to Buy programme. Additionally, you must not currently be a joint or individual owner of any portion of a residential property anywhere in the world.
Those who are accepted must be:
- First-time buyers who are at least 18 years old.
- Have a 1% deposit ready.
- possess a full-time job for at least three months.
- Have a third party verify your credit score and affordability analysis
Saving for a down payment makes saving for a home more appealing to prospective buyers, which is Save to Buy’s main advantage. In order to save money for their first residences, prospective first-time home buyers can forgo paying rent.
How does the help to buy work?
Save To Buy is offered on a few plots and is dependent on status. It is made to assist individuals who would not otherwise be able to afford to purchase. The concept is that the potential buyer stays in a brand-new property for up to two years at a fixed monthly cost, and 100% of the money they pay through the plan goes towards topping up their deposit – so they are paying absolutely no “rent” at all.
Once applicants have saved up enough money for a complete deposit, they can apply for a mortgage to purchase their house. Applicants only need a 1% deposit to get started.
According to the company, it will take between six and twelve months to save up a full deposit, but it will give you up to two years if you need it. Because the amount paid is determined by the applicant’s individual financial status and the typical area monthly rent, each Save To Buy agreement will be unique.
Successful applicants can increase their monthly payments to speed up the deposit-saving process, but they must seek the advice of a qualified financial advisor who is independent and independent. This advisor will be able to tell them how much money they will need to save as a deposit and how much income they will need to progress to purchase.
The applicant submits a mortgage application to an appropriate lender when they have one month left to save the necessary deposit sum.
Help to buy equity loan: Where are these homes located?
Numerous Save To Buy homes will be available all year round in West London’s New Hayes and Essex’s Epping Gate, depending on supply and demand. The plan is scheduled to continue through the end of 2023.
All of the homes, which range in size from one to three bedrooms, have a contemporary finish and installed kitchen appliances.
A private balcony or terrace is another characteristic of the units at New Hayes. Prices on the present market are between £325,000 to £500,000.
Help to buy home: Final thoughts
Anyone searching for their first house has an intriguing choice in Save To Buy. This developer-backed programme makes it simpler for prospective UK homeowners to swiftly save up enough money to realise their dream of home ownership and jump onto the property ladder. It does this by providing an alluring way to save money. We’re interested to see how many people use the plan and how well it functions in reality, though.