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The first four months of 2013 has seen a spike in the number of first-time buyers securing a place on the property ladder. According to market analysts, almost 10,000 more first-time buyers secured a mortgage deal than in the equivalent period of last year. Government schemes such as help to buy are thought to have played a big part in this welcome development. Under the scheme first-timers can buy a new-build home up to the value of £600,000 with only a five per cent deposit.
The help to buy scheme works in the following way:
For example; a home purchased at a price of £200,000 would break down as follows:
The mortgage will be paid back in the usual way, according to the lenders terms and conditions, but the equity loan will be interest-free for five years. In the sixth year, there is a charge of 1.75% of the loans value. After the sixth year the fees will increase in line with the Retail Prices Index plus 1%. A Help to Buy agent will contact the buyer before the fees start to set up monthly payments. For full details, see the Governments Housing & Local Services website https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loans.
As house prices seem to be on the rise, the future for first-time buyers is uncertain. However, the scheme is helping to make the present the best time in years for those wanting to get on the first rung of the property ladder. Help to Buy is currently giving confidence to lenders, such as Woolwich and First Direct, to provide affordable thee-year fixed deals to those accepted for it.
Sources: thisismoney.co.uk, www.gov.uk (image courtesy of telegraph.co.uk)
