The Future of Help to Buy: What Comes Next in 2023

First-time buyers might be curious about what will replace the government’s prominent Help to Buy scheme, which no longer accepts new applications. While it is true that there won’t be a help-to-buy scheme, there are other choices. Here, we outline a few possibilities that are now available, including mortgage solutions, business initiatives, and government programs. Before choosing the best alternative for help buying a scheme, contact an estate agent in Buckingham to buy a property.

Why is Help to Buy Scheme Ending?

It was always intended for the Help to Buy Equity Loan program to terminate in March 2023 officially. The government stated that the program would last from April 1, 2021, through March 31, 2023, when it was first introduced in 2018.

To legally finalize their home before the program officially closes, new applicants must submit their applications by the end of October 2022. Additionally, as of March 2023, a replacement for the Help to Buy Equity Loan program has yet to be formally announced.

What Will Replace Help to Buy?

What then will take Help to Buy’s place? For first-time buyers, are there many Help to Buy substitutes available? Yes, there are already a variety of options and plans that you should look into.

Mortgage Guarantee Scheme:

In 2021, the government’s mortgage guarantee scheme was established after the pandemic prompted lenders to cancel all 95% of mortgages. The government now guarantees to encourage lenders to start lending again. You must obtain a mortgage from one of the participating lenders after locating the home you wish to purchase (which must cost less than £600,000) to be eligible for the mortgage guarantee program. A competent mortgage broker will be able to explain your alternatives to you and find the best price. The program is set to expire in December 2023.

Shared Ownership:

You pay rent on the remaining portion when you purchase a share of a property (between 10% and 75%). As a result, you’ll need a lesser mortgage and down payment than if you were to buy privately. Additionally, you might gradually raise the percentage of your property. Housing groups or private developers offer these programs. Please read the fine print of your lease and examine each provider on its own merits, as the specifics, costs, and limits involved differ by provider. Purchasing additional shares in your property might be pricey, and because you only own a portion of it, you will be responsible for the full expense of upkeep and repairs.

First Homes:

The government’s First Homes program provides newly constructed homes at a discount of at least 30% below the market value of comparable properties to local first-time buyers, including key workers. The government estimates that purchasers can save an average of £70,000, making purchasing a home considerably more feasible. A discount of up to 50% is being provided in some places. The First Home will always qualify for this discount. This implies that the next buyer receives the value each time the property is sold. However, there are varied eligibility requirements for each local authority area, and very few First Homes are being constructed. 

Right to Buy:

A program designed exclusively for tenants wanting to purchase a council-owned home. If you choose to use it in this manner, it can also function as your down payment for your mortgage because it permits them to do so at a discount.

Proportunity:

Like the Help to Buy Equity Loan program, Proportunity enables you to acquire a home with only a 5% down payment by borrowing between 10% and 25% of the total purchase price, with the remaining amount covered by a mortgage. However, while using Proportunity, you begin paying interest on this loan from day one, unlike the Help to Buy Equity lending program. Opportunity states that the interest rate and cost of the loan “will depend on the property you would like to purchase and your financial circumstances” regarding what you’ll spend. However, it uses a 9.9% beginning interest rate for the first five years as its illustrative example. After five years, it will also return to the Bank of England base rate plus 9.99%. The fact that the program is available to all buyers, not just first-time buyers, is a positive. 

Wrapping Up:

The government’s Help to Buy scheme has been a significant help for many people across the UK to purchase property. However, with many changes to housing policy in the past few years, 2021 marks the official end of this scheme. Now, looking towards the future, there are various alternatives in 2023.

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