Help to Buy ends: what else is available?

Adapted from information sourced through Rightmove and the Home Builders Federation

Are you looking to buy your first home? Applications have now closed for the Help to Buy loan scheme in England, what other help is out there right now?

We have taken a look at some of the other government schemes and legislation changes that aim to either help you to get on the ladder, or to buy your next home.

What’s happening with Help to Buy?

The Help to Buy Equity Loan, set up to help first-time buyers purchase a home in England, has now closed to new applications. And all homes being purchased via the scheme will need to have completed by the end of March next year.

And what about Help to Buy ISAs?

The deadline to open a new Help to Buy ISA has already passed. However, anyone with an account already open can add up to £200 per month until the end of November 2029. You can still claim the government bonus – currently 25% on savings up to £12,000 – which is payable on completion of a first home purchase until 1 December 2030.

If you don’t already have a Help to Buy ISA, then a Lifetime ISA could be used as an alternative. To open one, you need to be over 18, but under 40. You can save up to £4,000 each year until you’re 50, and the government will top-up the saved amount with a 25% bonus (a maximum of £1,000 per year as a bonus). Like the Help to Buy ISA, you’re able to withdraw the funds to purchase your first home.

Stamp duty relief for first-time buyers

In September, the government announced a permanent change to the amount of stamp duty tax that’s paid on homes purchased in England and Northern Ireland. The threshold at which home-buyers start to pay stamp duty was raised from £125,000 to £250,000. If you’re a first-time buyer, there are further savings offered. You won’t pay any stamp duty on a home priced up to £425,000. For a home priced above this, you’ll pay 5% on the amount you spend between £425,001 and £625,000.

Deposit Unlock scheme

The Deposit Unlock scheme aims to help people buy new-build homes with a 5% deposit.  The good news is that if you’re looking to buy a new-build home, you could still get help in the form of the industry-led Deposit Unlock scheme.

The scheme has been introduced by the new homes developers who have built these types of properties, as choice can be limited for people looking to secure a 95% loan-to-value mortgage.

Deposit Unlock: how it works

Deposit Unlock is aimed at buyers – both first-timers and those already on the property ladder – who can raise a 5% deposit and want to buy a brand new home. The remaining 95% of the purchase price can then be borrowed from selected lenders participating in the scheme.

The first step is to find a new-build home included in the scheme at one of the participating developments. The housebuilder will confirm if the scheme is right for you.

Bristol, Bath and Exeter Mortgages Online will help you to ascertain if you qualify and meet the affordability checks for this type of mortgage, the housebuilder will provide you with written confirmation so you can apply to specified lenders for a Deposit Unlock mortgage. Once we have obtained an Agreement in Principle for you, you can then reserve your new-build home.

What’s the difference between Deposit Unlock and Help to Buy?

Under the Help to Buy scheme you put down a 5% deposit, take a government equity loan of up to 20% of the cost of the property (or up to 40% in London), and apply for a mortgage for the rest. The government’s loan is interest-free for the first five years. With a Deposit Unlock mortgage, you’ll take out a mortgage of a maximum of 95% and pay interest from the start.

Usually, lenders take out insurance on mortgages that carry a higher risk, including those taken out by first-time buyers with limited deposits. The Deposit Unlock scheme is backed by mortgage indemnity insurance funded by the developer, which shields lenders from any potential loss if the property is sold for less than the owner paid for it.

There will be no extra cost to buyers, however the buyer’s obligations to the lender remain unchanged.

What are some of the benefits of buying a new-build home?

New-build homes are popular with many buyers for many reasons. Location is key. When choosing a site, new homes developers carefully consider access points and the surrounding area. This means that most new homes are built in highly sought-after areas close to shops, public transport and other amenities.

They are also built with energy-efficiency in mind, and are well insulated, which means lower energy bills. These homes are move-in ready, and it’s often possible to design your home’s interiors before it’s even built.

Developers registered with the National House Building Council provide a 10-year structural warranty, which covers the cost of fixing any damage caused by faults or weatherproofing elements of the home. There are also similar guarantees available from other providers.

Who is eligible to use Deposit Unlock?

Deposit Unlock is open to buyers in England, Wales and Scotland.

Unlike the current Help to Buy Equity Loan scheme, Deposit Unlock isn’t just for first-time buyers, so you can use it to up or downsize, or to relocate. However, it’s not available to buy-to-let borrowers. Eligibility criteria for the scheme will be the same as the criteria your chosen lender applies to all its mortgages. This includes looking at your income, how long you have been in your current job, your expenses, and your credit score.

If you’re self-employed, it’s worth checking with participating lenders if you’ll qualify to buy using the scheme. Nationwide caps its mortgage products at 85% loan-to-value for self-employed borrowers, which means Deposit Unlock isn’t available.

When can I start using the scheme?

Right now – the scheme was trialled and then launched in 2021.

Is there a good choice of property available?

Yes, most of the UK’s biggest house builders have signed up to the scheme, with more expected to join.

Which lenders are offering Deposit Unlock mortgages?

Nationwide and Newcastle Building Society and Accord Mortgages, have signed up to offer mortgage products through the scheme. More lenders are expected to join in the coming months, which will give buyers more choice.

If you would like to talk to one of our expert Mortgage Advisers about remortgaging, moving house or getting on the property ladder please contact us today.

For further details about the services we offer as a fully independent mortgage broker or any other mortgage information book your FREE CONSULTATION with one of our expert Mortgage Advisers.

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