Help to Buy is the Government’s latest incentive to get us to buy more houses.
There’s a pot of £12billion available which someone has worked out will help release lending of about £130billion.
Big figures.
The money is being offered as an equity loan to buyers, interest free for five years, of up to 20% of the price of a new build property.
It’s like a summer sale.
See a place you like, say for £80,000, knock off £16,000 and get a mortgage of £60,000 after putting down a 5% deposit.
The government’s contribution means you can get a 75% mortgage at a much better rate, currently around 2.25% fixed for two years, giving monthly payments of £261 over a 25 year term. If you go for interest only its £112 a month.
You cannot rent anywhere for that sort of amount each month so little wonder then there has been a rush of people wanting to sign up with 4,400 reserving a new home under Help to Buy since it launched in May.
That’s a lot of people helped into a home of their own.
Outgoing governor of the Bank of England Mervyn (Lord) King has suggested it should be a short term measure, but banks are still penalising anyone wanting to borrow more than 75% of the property value and saving up a 25% deposit while rents are high and wages are static is a remote dream for anyone without access to help from family.
The scheme is also giving developers the confidence to get building again as they see buyers coming forward and they get full price for their properties.
A report to Manchester City Council this week says only 1,000 new properties were built in 2011 when the estimated need is 3,000 a year so anything that can be done to increase numbers has to be positive.
Becky Leighton is sales and marketing director of Prospect Homes, who are offering Help to Buy with the homes being built at their iconic Maine Place development on the site of Manchester City’s former ground, within easy reach of the city centre.
She said: “Raising the money for a large deposit remains the biggest and most common hurdle facing most buyers.
“This is the most helpful Government scheme so far and gives buyers the chance to get a home of their own with a small deposit and pay a monthly mortgage often much lower than the amount they would be paying in rent.
“We are really pleased we are able to offer it at Maine Place because buyers can own 100% of the property for only 80% of its price now.”
After five years you do have to start paying interest of 1.75% on the amount of loan you took out.
If you want to sell you also have to pay back 20% of the sale price – not the purchase price.
Click here to find out more on the Help To Buy scheme.
Find out more about Maine Place here: www.prospectgb.com
All images featured in this article are of ‘Prospect Homes’ Maine Place development in Manchester.
