How Help-to-buy programme will change in 2021
Buying a home is not an easy task. Many buyers are confronted with a misunderstanding of this process and do not know how to properly facilitate the purchase of a new home and which changes will come soon.
Sales and Marketing Director of Kebbell Andrea Fawell explains below how Help To Buy is changing and what alternatives are available.
Help to Buy scheme now
Help to Buy is one of the most popular government’s schemes. It is a loan of up to 20% of the value of your newly built home, so you only need a 5% cash deposit and 75% mortgage to cover the rest. There is also a London type of this scheme, where you can borrow up to 40% of the purchase price, as well as an Armed Forces Help to Buy scheme.
This scheme helps buyers who are struggling to save a deposit or who are struggling to buy in an expensive area, but has received some criticism for helping shoppers who may not need it. The scheme only applies to new homes under £600,000 and the home must be the buyers only property.
For the first five years, the loan is interest-free, then it is charged. You can pay in a lump sum or in parts. This scheme works not only for new buyers, so any buyer is eligible as long as they use it to buy their only home and do not use a partial exchange. Buyers can still use this scheme if they legally complete a home built by 28 February 2021 by March 31, 2021. The timeline may be subject to further changes as the government is urged to extend the timeline due to delays caused by the coronavirus.
Help to Buy scheme 2021
Help to Buy will change in spring 2021 because from April only new buyers will be able to use this scheme, and there are currently plans to phase out it entirely by 2023. The scheme will set a regional cap on property prices, aiming to help people who need the scheme the most.
Stamp duty holiday
The cancellation of stamp duty on properties under £500,000 means people will try to buy a new home in a hurry by the end of the holiday in March 2021. Thanks to this short-term scheme, the savings on stamp duty on the first £500,000 on a home purchase are £ 15,000. To benefit from these savings, buyers will have to complete their purchase by March 31, 2021.
Both Help to Buy scheme and stamp duty holiday will give great opportunities for the home buyers. It is important to highlight that before the purchase you should check twice is your property fit the necessary criteria and speak to the property experts to get the most benefits of the programmes mentioned above.
Andrea Fawell has suggested other schemes to consider:
“1. Part Exchange – If you are ready to move into your dream new home but are waiting to sell your current property you can avoid precarious chains and estate agent fees by your home being bought in part exchange. Kebbell’s Part Exchange Premium Scheme means we will consider your current home so long as it is less expensive than the Kebbell home you wish to buy. We will then instruct up to three local estate agents to value your home and then make you an offer based on its realistic resale value. We can also give you access to your previous home for a week after your purchase so you can move into your new Kebbell home at your own leisure.
2. Help to Buy ISAs – Choose a Help to Buy ISA to save for your first home and get a 25% Government contribution worth up to £3,000 once you have saved at least £1,600.
3. Make sure you have a mortgage offer in principle ready to go before you even start looking. If you are self-employed or a contractor, you may find securing your mortgage easier by using a mortgage broker who will advise you how to provide the necessary evidence of your income including tax returns that need to be signed off by a certified accountant.
4. Get your paperwork organised early. You will thank yourself for being organised when it comes to providing current utility bills, bank statements, payslips, credit card statements and any other credit agreements.
5. Check you are registered to vote to ensure you are on the electoral roll because lenders use this data in identity checks. You will need to provide photo ID too so make sure that your passport or driving license is up to date.
6. Boost your credit score to avoid delays in getting your mortgage. Check your credit file and look out for errors as they can be corrected, or explanations can be added to your file. Check your address is up to date on all active accounts. You don’t want to have delays because your mobile phone is registered at your old address. Close unused credit cards if you have multiple ones. Conversely, a long-standing credit card with a good rating may boost your mortgage application.
7. For a smoother mortgage application process also ensure you are consistent and precise with the spelling of names, postcodes and such like so every form completed is accurate. Most forms will be processed by a computer so there is little room for error.”