Seddon Blog

The ‘hows’ and ‘whys’ of Help to Buy

Posted on January 14th, 2014

Here at Seddon Homes we have seen how the governments Help to Buy scheme has benefited buyers of new home owners in 2013

If you Google Help to Buy you will be inundated with complex and often confusing information about this government scheme. But the simple fact is that this scheme provides real help to first time buyers to get on the first rung of the property ladder. Here are some key details:

  • Available in England for affiliated new builds such as Seddon Homes with a value up to £600,000.
  • Both first-time buyers and existing homeowners are eligible.
  • Buyers need a minimum deposit of 5%.
  • You must occupy the property and it must be your only property.
  • You cannot sublet your property.
  • You won’t be charged loan fees for the first 5 years of owning your home.

Firstly the HOWS…

How does it work? Well since April 2013 the government, affiliated house builders including Seddon Homes and approved mortgage lenders agreed to work together to try to stimulate the housing market by making it easier for first time buyers to get on the property ladder. First time buyers often struggled to find mortgage lenders who offered mortgages higher than 75% loan to value.
The scheme allows you to borrow up to 20% of the cost of a new build from the government. You only need a 5% deposit and a 75% mortgage to make up the rest. This means first time buyers can save for a smaller deposit than was previously required and still afford to buy their dream home.

Now the WHYS…

Help to Buy has been successful in helping first time buyers purchase houses they would not have previously been able to. Buyers have been embracing the scheme and benefitting from it by purchasing their first property. Here at Seddon Homes we have been proud to be part of a scheme that has enabled people to become home owners.

There were over 5,000 new homes bought in England with the support of the Help to Buy equity loan scheme with the average price of home being £194,167 and an average equity loan of £38,703. The majority of home purchases in the Help to Buy equity loan scheme was made by first time buyers, accounting for 4,948 (92%) of total purchases.

Terms like equity loans and shared ownership can seem complicated and confusing but the reality is that you won’t have to pay anything on the 20% loan for the first five years and in the sixth year you will be charged 1.75% of the loan’s value (which will increase every year by the retail price index plus 1%). You can sell your home at any time and if you do, you will have to pay back the loan: 20% of the sales price, which may be more than you originally borrowed if your property has increased in value.

As an affiliated developer, Seddon Homes can offer the Help to Buy scheme on a number of its developments including Mosaic in Runcorn, Greenway in Salford, Silkstone in Castleford, St James Place in Wigan and Oak Bank Mill in Burnley. Please contact our sales advisors for more information on the Help to Buy scheme.

Applying for an equity loan

If you’d like to buy a home with an equity loan, contact the Help to Buy agent in the area you want to live or contact a participating house builder.

Selling your home and paying back the loan

The home will be in your name, which means you can sell it at any time. You’ll have to pay back the equity loan when you sell your home or at the end of your mortgage period — whichever comes first.

You can also pay back some of your equity loan without selling your home. You can pay back either 10% or 20% or the total amount, so long as the loan is worth at least 10% of the value of your home.

The HCA has an appointed post sales agent who will be your point of contact after your purchase, on completion you will be issued with full details.  all post sales procedures can be found on the my Post sales website.

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