The deadline to use the government’s Help to Buy scheme will be 6pm on 31st October 2022, giving first-time buyers less than five months to apply. The application deadline was expected to be the end of December, but Homes England, which operates the scheme, has confirmed that no new applications can be made after 6pm on 31st October. Here, we explain how the scheme works, and which deadlines buyers need to be aware of.
How does Help to Buy work?
The Help to Buy equity loan scheme is available to first time buyers with a 5% deposit to put down and can be used by those purchasing new build homes up to the value of regional price caps. Under the scheme the government will lend homebuyers up to 20% of the property price interest-free for the first five years, or up to 40% of the property price if you’re buying in London. Interest on the loan will then be charged at an interest rate of 1.75% of the equity loan in the sixth year, and after that will rise in line with the Consumer Prices Index (CPI) measure of inflation plus another 2% until the loan is repaid. The equity loan must be repaid in full when you finish paying off your repayment mortgage, sell your home or reach the end of your mortgage term, which is normally 25 years. You can pay off your equity loan in full, or make part payments, at any time before then. Any part payments you make must be equivalent to at least 10% of the market value of your home at the time.
Application deadlines explained
The deadline to reserve a home and apply for the Help to Buy equity loan scheme is 6pm on 31st October 2022. You will need to submit your Property Information Form to your Help to Buy agent by this date. The new build home you’re buying must be built and ready to live in by 31st December 2022, known as ‘practical completion’. Your homebuilder should confirm whether your new home will be ready by this date before you apply. The scheme finishes for good on 31st March 2023, so your purchase must legally complete on or before this date. Your completion date is when you become the official owner of the property and pick up the keys to move into your home. If you miss the 31st March deadline, you won’t be able to get the equity loan, as there will be no extensions to this date allowed. If you want to use the Help to Buy scheme, you’ll need to reserve a home from a homebuilder who is registered with the scheme. A Help to Buy agent will check that you’re eligible for the scheme and give you the authority you need to make your purchase. You can find contact details for a Help to Buy agent in your area here. You can compare Help to Buy mortgage deals here.
Other options for first time buyers
If you don’t think you’ll be able to meet the March 2023 Help to Buy deadline, there may be other options available to help you get onto the property ladder. Several lenders offer 95% mortgages to those with small deposits, so it’s worth seeking professional advice from a broker about which deals you might be eligible for. If you don’t think you’ll be able to save up a big enough deposit to buy a home on your own, you might want to consider a shared ownership scheme. Shared ownership allows buyers to purchase between 10% and 75% of a property, and then to pay rent on the remaining share, which will be owned by a housing association. You can then purchase additional shares as and when you can afford to. You can compare shared ownership mortgages here.
