Help to Buy: How it works
17 MAY 2019
First-time buyers can snap up a fabulous new home at Quadrant Wharf, in Plymouth’s vibrant coastal quarter of Millbay, for a deposit as little as £8,250, thanks to the Government-backed Help to Buy scheme. Sue Dyer, from Plymouth agents Atwell Martin explains how it works.
Being a first-time buyer can be a daunting process, with often complicated financial and legal jargon to get to grips with, and the prospect of deposits that can seem out of your league. You may even worry that you will never be able to afford to purchase your own home. But this doesn’t have to be the case.
The good news is that first-time buyers in the South West are being given a leg-up on to the property ladder, with the help of the Government-backed Help to Buy scheme. The scheme offers loan assistance to help buyers purchase their first home as well as to homeowners looking to move.
And it means that modern and contemporary new builds, like the new homes at Quadrant Wharf in Millbay, are brought into the reach of prospective buyers choosing to take advantage of a Help to Buy Equity Loan.
How does it work?
The Help to Buy scheme makes it easier for people to buy a property who, perhaps are struggling to put together a deposit and makes new builds available to all home buyers. There are certain restrictions however. For example, you won’t be able to sublet this home or enter a part exchange deal on your old home. And you must not own any other property at the time you buy your new home with a Help to Buy: Equity Loan.
Under the scheme, buyers will only have to put down a minimum of five per cent of the purchase price. The Government will then lend up to 20% of the value of the property, the maximum you can borrow from Help to Buy is £120,000.
After that, you will need to secure up to a 75% mortgage from a commercial lender such as a bank or building society to make up the rest.
With selected contemporary new homes at Quadrant Wharf eligible for Help to Buy, it means buyers could move into Plymouth’s coastal quarter of Millbay with a deposit of as little as £8,250 on a one-bedroom apartment costing £165,000 or £11,500 on a split-level home with two bedrooms with a purchase price of £230,000.
What are the benefits?
Not only do buyers need to secure smaller deposits, but first-time buyers also benefit from having to pay no stamp duty on homes up to £300,000 – so together these two Government initiatives increases the buyer’s prospects of qualifying for a mortgage, as they are ultimately having to borrow less from commercial lenders.
The Help to Buy loan is also interest free for the first five years, allowing first-time buyers a chance to adapt to life as property owners, with regular mortgage and bill payments. After this period, there will be an interest fee of 1.75% on the amount of the outstanding loan, with this rate increasing in line with inflation (based on the Retail Price Index) plus 1%. You will have to pay a monthly management fee of £1 per month from the start of the loan until it is repaid.
When do I have to pay the loan back?
The loan must be repaid after 25 years or when you decide to sell the property, if earlier.
The total amount repayable by you will be the proportion of the market value of your home that was funded by the Help to Buy loan, plus interest and charges.
The amount you will have to repay under the loan agreement will depend on the market value of your home when you repay the Help to Buy equity loan and the rate of inflation in the meantime.
Buyers also have the option to make voluntary part repayments at any time. The minimum voluntary repayment is 10% of the market value at the time of repayment.
What should I do next?
With the Government’s Help to Buy scheme available at Quadrant Wharf, now is a really great time to invest in this exciting new neighbourhood.
To start your journey on the property ladder, contact our sales team at Quadrant Wharf for more information on our new 137-home development, which started in autumn 2017. The first new homes are now available for reservation, with residents anticipated to start moving in from autumn 2019.
To help calculate your budget, use our Help to Buy calculator.