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As the Author of the Diss and Harleston Property Blog, I like to post regular articles on the local market, interesting statistics and new properties coming to the market.  So, if you are someone just interested in the property market, buying, selling, investing or a Landlord, I am always available to answer any questions or give advice about buying a property, even if a property on the market with another estate agent.  You can telephone me on my direct line 07919 416831 or email at kevin@parson.ltd.uk.

 

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Should You Use the Help to Buy Scheme for Your First Diss and Harleston Property Purchase?

Should You Use the Help to Buy Scheme for Your First Diss and Harleston Property Purchase?

NEWS Kevin Parson 16th June 2021

Three-minute read to help you consider the Help to Buy Scheme from all angles.

The Help to Buy scheme is a government-backed equity loan opportunity. It is also referred to as ‘shared equity’.

The scheme is currently only available on new build properties. The loan from the government is up to 20% of the purchase price (40% in Greater London). This means that you only need to raise a 5% deposit and get a 75% mortgage (55% in Greater London).

Let’s consider the benefits and downsides of using this option.

Pros

Although this can be called a ‘shared equity’ scheme, you will own the property 100% outright.

This low deposit amount is what can make the scheme appealing to many. It allows you to get onto the property ladder often much quicker than if you had to save for a 10% or more deposit. It’s also cheaper than getting a 95% mortgage, which is what you’d have to do without the scheme.

The first five years of the loan are interest-free and there is no maximum household income cap.

You have 25 years before it has to be paid back in full.

Cons

There isn’t a household income cap but there are regional price caps. For example, in the North West, you couldn’t purchase a property for more than £224,400 using this scheme. In London, you couldn’t spend over £600,000.

The first five years are interest-free but after that, you’ll be charged an annual fee of 1.75% on the outstanding loan amount. This fee goes up each year with inflation. The loan becomes more expensive over time but your wages may not increase at the same rate.

When you sell the property, you must pay off the loan in full. However, because the loan is a percentage of the market value of your home, the loan amount may end up being more if your home has gone up in value. This might mean that you are left with a lot less from the property sale than you would have otherwise had. This can make upsizing harder as you’re not scaling the property ladder in a linear manner.

It’s important to seek specialist financial advice if you are looking to take advantage of the Help to Buy scheme. We can recommend trusted independent financial advisers and mortgage specialists.

If you would like some support to explore what route to take when buying your first Diss and Harleston home, don’t hesitate to get in touch with us on 01379 646180.

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