The Government Is Ending Help To Buy In October 2022:
It was announced by the UK government on May 17th 2022, that the popular Help To Buy Scheme will be ending on October 31st 2022, 2 months earlier than expected. The government states that the housing market conditions improved and there are enough financial products available to help home buyers.
Read here to find out why Help To Buy is ending in October 2022?
This means that the last application for a Help-To-Buy new house will be accepted on October 31st and the house should be ready by March 31st 2023.
Since its launch in 2013, this popular scheme has helped over 355,634 Households to buy their new homes, of which 83% are first-time buyers.
Luckily, there are plenty of alternatives out there that can help you get onto the property ladder.
Read on to find out some of the alternatives to Help To Buy that will help you in your quest of finding a new home.
The Top 5 Alternatives To Help To Buy
1. Deposit Boost:
What Is Deposit Boost?
Deposit Boost is a scheme that helps you increase the size of your house deposit with the help of:
- A family remortgage with Tembo or Generation Home
- A House developer offering a deposit boost such as Barratt Homes’ deposit boost plan.
- The family boost mortgage programme offered by Halifax.
This Help To Buy alternative is a great way to boost your chances of getting lower interest rates on your mortgage.
How Does It Work?
The usual amount required for a deposit is 10% of the total value of the house.
Let’s say you want to buy a new home worth £200,000. You will need £20,000, 10% of the total amount.
However, £20,000 is a considerable amount and you have only £10,000.
Your family member, as your booster, will release the needed value out of their owned property and add it to your deposit.
In this case, your deposit booster will be adding the missing £10,000 to your deposit, which is equivalent to 5%.
This way, you will have the necessary 10% deposit needed.
Who Is Eligible For Deposit Boost?
Deposit Boost is available for both first-time home buyers and existing homeowners.
However, there is always the condition of the minimum deposit. Usually, you need to have a minimum of a 10% deposit ready to be eligible.
2. Lifetime ISA:
What Is Lifetime ISA?
Lifetime ISA (LISA) is an ISA plan created to help people save for their first home.
This Help To Buy ISA alternative is a good choice for first-time buyers who want to boost their savings for the purchase.
How Does Lifetime ISA Work?
The Help To Buy ISA alternative makes saving for your first home as easy as possible.
If you’re between 18 and under 40, you can open a LISA account and save up to £4,000 per year until you are 50.
The government adds a 25% bonus to your savings at the end of each tax year. The maximum bonus you would receive per year is £1,000.
Once you are ready to buy your first home, you can withdraw your savings plus the 25% bonus.
Let’s put this in a concrete example.
You start saving at the age of 20, and you save £1,000 a year.
At the age of 40 you decide to buy your first home. With some calculations, you find that you saved £20,000 over the total period.
Adding the government’s bonus of 25%, your total savings will add up to £25,000.
This way, you will have a considerable amount to help with your deposit.
Who Is Eligible?
There are specific qualifications for first-time buyers:
- You need to be aged between 20 and under 40.
- You must take your first payment before you are 40.
- Your first home needs to be less than £450,000.
If you meet these requirements, The Lifetime ISA scheme will be a reasonable alternative after October 31st. Find out more about it here.
3. Income Boost:
What Is Income Boost:
It is common for a lender in the UK to offer 4 to 5 times a buyer’s income. Yet, the average house price in the UK is around seven times higher than first-time buyers’ average income, which causes an issue of affordability.
Income Boost, as the name suggests, is a plan which focuses on increasing the income for the mortgage application.
An income boost is a great help to buy alternative if you have family members or close friends willing to help you.
It is essential to know that the family member or friend who will help boost your income will be named a joined borrower and is liable for mortgage repayments in case of default.
How Does Income Boost Work?
Here is an example of how Income Boost works.
Let’s say the new house you want to buy is seven times higher than your income, and you cannot afford this much mortgage.
In this case, a family member or a friend will add some of his income to fill the affordability gap.
With this income boost, you can obtain a higher mortgage offer with better interest rates.
Who Is Eligible?
This Help To Buy alternative is excellent for people with family members or friends willing to help them get on the property ladder.
To be eligible for it:
- You need to find a family member willing to help; sometimes, a friend might be suitable.
- The Booster needs to have a sufficient UK income and bank account proven through a stable income, pension or investments.
- The Booster needs to have a good credit history.
4. The Government Shared Ownership Scheme:
The government offers an attractive shared ownership scheme as part of its strategy to boost the housing market.
Shared ownership is an excellent alternative to the Help To Buy Equity Loan scheme, especially for people who can not save enough to buy a property outright.
The scheme usually consists of buying stakes in the property you want to buy, between 25% and 75% and later paying rent for the part you don’t own.
How Does The Government Shared Ownership Scheme Work:
Here is a breakdown of how the shared ownership scheme works:
- First, you need to register and complete a shared ownership application form. Usually, you can find all the information with the Help To Buy Agent in our area.
- Then you need to confirm with the landlord about the property you want to buy.
- After that, you need to reserve the property. Usually, the landlord will ask for a fee to secure it, up to £500.
- Finally, you need to choose a conveyor who will help you with all the legal work.
Who Is Eligible?
To be eligible for shared ownership, you need to meet both of the following requirements:
- Your household income is less than £80,000 a year.
- You cannot afford the entirety of the deposit and the mortgage payments for the home you want to buy.
Not only first-time buyers are eligible for this Help To Buy alternative, but also:
- People who used to own a home and cannot afford to buy one now.
- People who own a home and need to move out but can not afford to buy a better home.
- Existing shared owners who want to move.
5. Home Reach:
What Is Home Reach?
Home Reach is a “part-buy part-rent” owned by Heylo and offers over 6000 properties, with major house builders supporting first-time buyers acquiring their first home.
This Help To Buy alternative lets you own a part of the property and pay a monthly rent for the part you don’t own.
How Does Home Reach Work?
With Home Reach, you can buy a share of the new house up to 75% and a minimum of 25%.
Your share of the house depends mainly on your income. The higher your income is, the higher stakes you can obtain in the house.
You will need to pay 2.75% rent monthly via direct debit for the rest that you do not own.
Eventually, you can acquire more shares in your home until you own the entirety of it and stop paying rent.
Who Is Eligible?
There are three criteria for eligibility:
- Income: Your household income can not exceed £80,000; £90,000 in the case of London.
- Inclusivity: This scheme is mainly to empower people in need of buying a home. For that reason, you need to be a first-time buyer or used to own a home but don’t anymore.
- Financial Assessment: A financial assessment will verify your ability to pay the required monthly costs. An independent financial review will be run and will give the final confirmation of your application. TIP: A good credit history is always beneficial in this case.
With the Help To Buy Equity Loan scheme ending by October 31st, new home buyers are either applying for a Help To Buy property or trying to find the best alternative to Help To Buy Equity Loan.
With the 5 Help To Buy alternatives above, you have the best options to replace the Help To Buy scheme and afford your new home.
At Getting On The Ladder, we offer the best selection of new home deals in various regions in the UK.
Our mission is to help you find the most affordable properties that suit the Help To Buy alternatives above.