Help to Buy Is Ending Early. Are There Any Alternatives for Homebuyers?

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The government’s Help to Buy scheme is ending two months earlier than expected. The deadline for applications was expected to be at the end of 2022, but now first-time buyers wanting to use the scheme will have to reserve a property by 6pm on 31 October 2022. 

Then, the purchases must complete before 31 March 2023, which is when the scheme is set to officially end. Help to Buy was first launched nearly a decade ago to kickstart the property market following the financial crisis, and the scheme has been used by an estimated third of a million households.

Help to Buy is no longer available on any Salboy schemes as our remaining homes under the North-west price cap now complete after the new cut off date.

What is the Help to Buy scheme?

Under the scheme, buyers could get an equity loan of up to 20% toward the cost of a new-build home (or up to 40% in London). To buy the home, buyers would then only need a deposit of 5% and a 75% mortgage. On the government loan, the buyer won’t be charged any loan fees for the first five years.

Last April, the Help to Buy scheme was restricted to only be used by first-time buyers, and the government also introduced regional price caps, which were based on 1.5 times the average first-time buyer price in each region.

This change has led to a substantial decrease in the number of people using Help to Buy with the largest drops being in the North West, West Midlands and North East.

What alternatives are out there?

With Help to Buy coming to an end, what other schemes are out there that homebuyers could take advantage of? Here are four potential alternatives.

1. Mortgage Guarantee Scheme

Originally announced in the 2021 Spring Budget, the mortgage guarantee scheme is open until 31 December 2022. Participating lenders are offering 95% loan-to-value mortgages under a guarantee from the government. This means buyers will only have to put down a 5% deposit for mortgage products available under this scheme. To find out if you can buy a home with this type of Mortgage, please contact an independent mortgage advisor. 

2. Lifetime ISA

First-time buyers saving up for a house deposit can use a Lifetime ISA. Through this, buyers can save £4,000 per year. Then the government adds a 25% bonus – up to a maximum of £1,000 each year. The money must then be used to either buy their first home or for retirement.  To find out if you can buy a home with this type of Lifetime ISA, please contact an independent mortgage advisor. 

3. First Homes

Launched in June 2021, First Homes is an initiative where first-time buyers, key workers, and local people can purchase a new-build home at a 30-50% discount to its market value. When the property is later sold, the discount will be passed onto the next buyer as well. Only a small number of developments are available on this scheme and are not currently available on any Salboy developments.

4. Shared Ownership

Shared Ownership is a government scheme that allows people to buy a share of a property from a housing association and pay rent on the rest. As the buyer would only own part of the home, they only need to pay a smaller deposit and would have lower mortgage payments. Shared ownership is not available via Salboy.  Most shared owner schemes are managed by registered providers and housing associations.