The Rise and Fall of the Help To Buy Scheme
Have you ever dreamed of owning your property but found that the initial funds are just out of reach?
Perhaps you’ve come across the term ‘Help to Buy scheme’ in passing that wonderful program that allowed people to purchase a brand home with only a 5% down payment made even more appealing by an interest free loan from our government.
However, like good things this program suddenly came to an end. Curious about what happened? Grab a cup of tea, relax and let’s explore the story behind the Help to Buy scheme and its unexpected conclusion.
The Low-Down
Even though the official end date on our calendars was marked as March 31 2023 new applicants were no longer accepted into this program as of October 31 2022.
This initiative offered an opportunity to receive loans equivalent to 20% of the cost of a brand new property and here’s the best part; there was no maximum income limit.
However, despite its attractiveness it faced criticism from some people who believed that it artificially drove up property prices because of the price limits in certain regions and the fact that it only applied to new homes.
Throughout its existence, the program acted as a benefactor to more than 350,000 first time homebuyers enabling them to secure their homes with only a 5% initial payment. However like stories there’s a catch. After five years have passed the charming loan comes with a 1.75% interest rate spread out over a delightful 25 year repayment period.
Nevertheless Help to Buy wasn’t without its challenges. Buyers sometimes faced options when it came to available properties and had to deal with additional charges if they desired more. Then there’s the task of remortgaging.
On the other side of the coin, there’s also the Shared Ownership scheme which is available as an alternative government scheme which is widely available throughout the UK and supported by a range of similar companies that also helped promote the Help to Buy scheme. The option of Shared Ownership might be enticing, allowing buyers to own 25% of a property while paying rent for the remainder and this one looks more promising in terms of longevity, one we recommend looking into as a viable alternative. There are a range of these companies now promoting properties in areas such as Northamptonshire and further in the North too such as the Greater Manchester area. We recommend you take a look.
The big question remains; why did the government decide to end Help to Buy? Speculation suggests that perhaps it favored those with financial means and didn’t do much for individuals genuinely struggling in the property market.
This unexpected turn prompted people to explore other paths, towards property ownership. Consider the idea of zero deposit mortgages. Relying on traditional savings as a more reliable foundation, than one’s income or property ownership. Before making any decisions it’s important to evaluate all available options.
Options, Options, Everywhere!
Now that the Help to Buy program has come to a close it’s time for aspiring homeowners to explore alternative paths towards owning a new property. This scheme was a blessing for many enabling over 350,000 people to become homeowners by providing a 5% deposit and a government equity loan. However as one opportunity closes several others emerge.
For those with funds, no deposit mortgages or guarantor mortgages could be viable solutions.
Whether it’s pursuing the Help to Buy dream before its expiration or considering Shared Ownership each option has its advantages and peculiarities. The key is to gather all information and carefully evaluate the pros and cons before making a decision. Taking an approach now can potentially prevent future complications.
Whether it’s the No deposit mortgages, the guarantor ones or the ever-popular Shared Ownership schemes, there’s a path for everyone. Another enticing prospect is Deposit Unlock, tempting buyers to snag new build homes with just 5% upfront, courtesy of the house builder insuring the mortgage.
Why Was The Help To Buy Scheme Controversial?
While the Help to Buy scheme was beneficial for many and undeniably played a significant role in aiding numerous individuals and families to step onto the property ladder, it wasn’t without its criticisms.
Impact on Housing Prices
One of the most prominent criticisms was that the scheme unintentionally drove up house prices. By increasing demand without a proportional increase in supply, the scheme inadvertently caused house prices to rise. This in turn arguably made it even harder for those not taking advantage of the scheme to purchase a home.
Benefiting Developers
Another concern was that the scheme primarily benefited housebuilders and developers. With a rush of potential buyers having access to the equity loan, builders saw an opportunity to raise prices, knowing that the government-backed loan would buffer the cost for the buyer.
Potential Negative Equity
The potential for negative equity was a real risk with the Help to Buy scheme. Negative equity occurs when the value of the property falls below the amount owed on it. Considering that the scheme was restricted to new builds, which can often depreciate in value quicker than older homes in the initial years, there was an inherent risk associated.
Not Accessible for All
Finally, while the scheme was advertised as a way to help first-time buyers, it was not available to everyone. Some critics argue that it mostly benefited those who were already in a relatively good financial position to buy and not the ones struggling the most in the housing market.
What Are The Next Steps For Potential Home Buyers?
With the end of the Help to Buy scheme, it’s essential for potential homeowners to review their options carefully. Here are some steps to consider:
1. Research Other Schemes
There are numerous other schemes and programs available. Investigate all available government and non-government schemes to see which might be a suitable fit for your circumstances.
2. Financial Counseling
Speak with a financial or mortgage adviser. They can provide guidance tailored to your individual financial situation and help you navigate the complex world of mortgages and homeownership.
3. Save More
Without the added benefit of the Help to Buy scheme, potential homeowners might need to save a larger deposit. Consider setting up a savings account dedicated to this purpose and routinely contribute to it.
4. Reevaluate Property Needs
Consider what you truly need in a home. Can you start with something smaller or in a different location than initially desired? Reevaluating your property needs might make homeownership more accessible.
5. Stay Updated
The housing market and associated schemes can change rapidly. Stay updated with any new initiatives or programs that might assist you in the journey towards homeownership.
Wrapping Up
With all these prospects on the horizon, your dream home might be closer than you think. Whether you’re mourning the end of the Help to Buy scheme or eagerly scouting for fresh options, remember, where there’s a will, there’s a way(home)!
P.S. Just to keep things real – don’t forget to always consult with a property expert or a financial adviser before making any big decisions!
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