Laureate Fields was recently shortlisted for Best First Time Buyer Family Home at the First Time Buyer Readers’ Awards and is a great first purchase for families looking to put down roots as well as young professionals looking for a starter home. In 2021, the Government introduced their new Help to Buy scheme, so we’ve put together this Q&A to help answer your questions.
What is the purpose of Help to Buy?
Help to Buy makes it easier to get on the property ladder. Since the Financial Crisis in 2008-9, first-time buyers with a small deposit had struggled to get a mortgage for a new home. In 2013, the Government introduced a Help to Buy Equity Loan to reduce the loan-to-value (LTV) ratio, thereby making mortgages more accessible and more affordable.
How does it work?
All you need is a 5% deposit, and the Government will top it up with a 20% Equity Loan. This will enable you to get a more affordable 75% LTV mortgage for the remaining amount of the purchase price. What’s more, the Equity Loan is interest free for the first five years so your monthly repayments will be lower than they otherwise would have been.
Most people’s salaries go up after five years so when the interest kicks in you should either be in a better position to afford it, or you can increase the size of your mortgage to pay back the Equity Loan.
From year six, monthly interest on the Equity Loan is 1.75% and this will rise by the Consumer Price Index (CPI) plus 2% each year in April. When you do decide to pay back the Equity Loan, the amount you pay is worked out as the percentage of the Equity Loan against market value of your home at the time you choose to repay. This means you’ll have to pay back more if the value of your property has increased, but also less if it has fallen.
Unit type: Two-bedroom apartment
Purchase price: £230,000
20% HTB Equity Loan: £46,000
5% deposit: £11,500
*Based on typical 1.99% interest rate and 25-year mortgage term.
Who can use Help to Buy?
You must be a first-time buyer, meaning you haven’t owned a home or land anywhere in the world now or in the past. This includes part owning a home with someone else or inheriting a property. The property must be used as your primary residence, so usually you won’t be able to rent it out until you have paid back the Help to Buy Equity Loan. There may be certain circumstances where you can rent your property for a short period of time, but this will need to be approved by your local Help to Buy Agency.
Can I buy with my partner?
Yes, you can make a joint application with your partner if you will both live in the home as your only residence and are both first time buyers. Applying together is a good way to combine your incomes to get a bigger mortgage.
What properties are available?
In the East of England, Help to Buy is available to those purchasing a property of up to £407,400. This means all of our one and two-bedroom apartments and two-bedroom houses at Laureate Fields are available with Help to Buy as well as many of our three-bedroom houses.
Once I’ve found a home that I like, how do I arrange a Help to Buy mortgage?
Simply contact our sales team and we’ll put you in touch with our affordability team. They will ask you a series of questions about your circumstances, income and monthly outgoings to assess how much you could borrow and whether or not you’re eligible for Help to Buy. If you can afford the property you’re after, they can either help you find the best mortgage for you, or you can contact your own mortgage broker.
Laureate Fields currently offers a premium collection of two-bedroom apartments and two, three and four-bedroom houses, with prices starting from £230,000. Call 01394763047 to book a viewing or for more information, contact us.