Left in the lurch? What happens when Help to Buy ends?
With the end of Help to Buy and economic uncertainty making the homebuying journey that much more challenging, it’s important to acknowledge that there are still options out there for first time buyers.
Mortgage Advice Bureau (MAB) is working in partnership with Home Builders Federation (HBF) on New Homes Week, an annual campaign that promotes the benefits of new build homes.
New Homes Week takes place from Monday 27 February to Friday 3 March, with the ultimate aim of giving customers the confidence they need to buy a new build home in an ever-changing mortgage market.
Being a first time buyer is stressful, and finances are a major part of that. For many years, first time buyers across the UK relied on government schemes like Help to Buy. Without those, buying your first home can feel even more challenging.
Fortunately, there are still options available to first time buyers, even if there are currently no plans to extend or replace Help to Buy.
Help to Buy is already closed
It’s important to note that Help to Buy has already ended, though applicants who submitted before the cutoff date still have till Friday 31 March 2023 to complete the purchase of their home. By “complete the purchase”, we mean you legally own the house and can move in.
Why did Help to Buy end?
With over 360,000 people using Help to Buy to purchase their first homes (as of August 2022)1, it makes sense to question why the government would close such a scheme. A report by the House of Lords noted that the Help to Buy scheme actually pushed up home prices2 with the same report noting that the scheme cost the government £29 billion, though this was an estimate based on when the scheme would end.
It’s important that we recognise that there was some controversy surrounding the Help to Buy scheme, but it helped many people get on the property ladder. Would those houses have been cheaper if the scheme had not existed? Shelter, England states that the fundamental problem with the Help to Buy scheme was that it aimed to solve the issue of unaffordable housing, but only pushed prices higher as the amount of mortgages issued is a key driver of house prices.3
First time buyer schemes
Keeping in mind that Help to Buy may have had its faults, it’s still important to acknowledge that first time buyer schemes can make a huge impact when it comes to buying your first home.
The First Homes Scheme
The First Homes Scheme is an initiative designed for local first time buyers and key workers and offers new build homes at a 30% discount on market prices. It is only available in England and participating homes must be a new home or an existing home that was originally bought as part of the scheme.
Mortgage Guarantee Scheme
Launched in April 2021, the Mortgage Guarantee Scheme is designed to support first time buyers buy their homes with a 5% deposit. Under this scheme, the government offers your lender a financial guarantee, which means they can offer you a 95% mortgage, subject to the typical affordability checks, on a house worth up to £600,000.
It was originally meant to close at the end of 2022 but as it’s already helped over 24,0004 households, the deadline has been extended to December 2023.
Considering the average price of a home in the UK sits at around £281,6845, it’s fair to say that paying for your first home is no walk in the park. The Shared Ownership Scheme aims to make this a little easier by allowing first time buyers to buy a share of a property (usually between 25-75%) and pay rent on the outstanding amount.
Over time, you can buy additional shares in the property until you own it outright.
How to find help buying your first home
Buying your first home can feel overwhelming, and while there are plenty of options out there to make the journey a little easier, it's hard to know what is going to best suit your circumstances.
Our advisers are on hand to help make the process a little easier by offering tailored, bespoke advice and guiding you through the mortgage process. Get in touch with us today and let us help you find a solution that is going to work for you.
For more information about New Homes Week, head on over to New Homes, Home Builders Federation.
Your home may be repossessed if you do not keep up monthly repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
2Churchill Wealth Management, 2022
3Shelter, England, 2022
5Forbes Adviser, 2023
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.