New “Help to Buy” housing scheme

Chancellor George Osborne has today announced new plans to help people to buy their own homes.

The Help to Buy scheme improves on a previous scheme known as FirstBuy.

The main points of the new scheme are:

  • It enables buyers to put down a 5% deposit on a newly built home.
  • Up to 20% of the cost of the home is funded by a “shared equity” loan, which will be repayable when the home is sold. That loan will be interest-free for the first five years.
  • Thereafter borrowers will have to pay a 1.75% annual fee on the “shared equity” loan, which will then rise by 1% above the Retail Prices Index (RPI).
  • The remainder is paid for with a standard mortgage.
  • Whereas the previous scheme was only open to first-time buyers, this one will be available to all buyers of newly built homes.  The income limit of the previous scheme @ £60,000 a year will not apply to the new scheme.
  • It will cover newly built homes up to the value of £600,000.
  • Borrowers will be able to apply from April 1st 2013.