As many people who yearn to have a place to call their own will probably be aware, homeownership isn’t exactly the cheapest thing in the world. Even though the housing boom which saw property prices go through the roof ended six years ago, many people would have to save something in the region of £20,000 just to pay for a deposit!
The problem of unaffordable housing is at least being partially addressed by the government, who had launched a scheme aimed primarily at first-time buyers to make buying a home more affordable. Help to Buy, which comes in two strands, was designed to try and boost the housing market, which has shown signs of recovery, as well as giving encouragement to house-hunters.
Lending a helping hand?
Help to Buy is split into two parts, the first of which had opened when it was first launched a few months ago. The second strand isn’t due to begin until next year, where more will become known about how it works in full.
The Equity Loan sees the government provide a loan equivalent to 20% of a property’s value, repayments for which over the first five years are interest-free. Participants must put a deposit of at least 5%, and the scheme only covers new-build properties with an asking price of below £600,000. The only people eligible for an Equity loan are first-time buyers.
Due to commence in January 2014, the mortgage guarantee is a little more flexible. Although the £600,000 property price limit is still implemented, existing homeowners are eligible for it, while older properties also come under this part of the scheme. The Guarantee enables homeowners to pay a deposit of just 5%, while lenders will be encouraged to be more open.
With both parts of Help to Buy, a good credit rating is essential, as is keeping up mortgage payments. Also, it’s important for prospective buyers to know whether or not they can afford to buy a property even after taking into account the discounts they stand to receive.
Lenders taking note?
Following on from the initial success of Help to Buy, some banks and building societies have begun to lend more money in the form of mortgages. This suggests that the housing market is recovering, and that lenders are becoming more receptive to customers’ needs.
YBS.co.uk was one such lender, who saw £925m given to mortgagees in the first six months of 2013. About this story, chief executive Chris Pilling said:
“Our fundamental aims as a building society – helping people to save for the future and buy their own home – are unwavering and being so closely rooted in our communities makes us ideally placed to achieve them.
“Net lending has been solid so far this year and we strongly expect this will increase further in the second half of 2013.”