First time buyers will have two months to apply to the governments help to buy equity loan scheme.
- The Help to Buy equity loan scheme will stop accepting new applications at 6pm on 31 October, before closing completely on 31 March 2023
- The initiative enables first-time buyers to purchase a new build property with just a 5% deposit
- There are still a number of government schemes available to help both first-time buyers and those trading up the housing ladder
First-time buyers have just two months left to use the Help to Buy equity loan scheme before it closes to new applicants.
The flagship initiative to help people get on to the property ladder will stop accepting new applications at 6pm on 31 October, before closing completely on 31 March 2023.
The scheme enables people to purchase a new build property with just a 5% deposit. The government then tops this up with a 20% equity loan, rising to 40% in London, that is interest free for the first five years.
Since it was first launched in 2013, more than 350,000 people have used the Help to Buy equity loan to purchase a home.
You can visit the government website for more details on Help to Buy which explains how the scheme works.
What does the deadline mean?
Because the Help to Buy equity loan only applies to new build properties, the scheme effectively has two deadlines.
This is because new build properties are typically sold off plan and then have to be built.
As a result, the first deadline of 6pm on 31 October is the date by which you must apply to the Help to Buy equity loan scheme, having agreed to purchase a home off plan.
In practice, this means submitting your Property Information Form to your Help to Buy agent by this date.
The second deadline of 6pm on 31 March 2023 is the date by which you must have legally completed on your home, meaning you must have the keys and be able to move in.
If you don’t complete by this date, you will not be eligible for the equity loan.
There is also a third deadline you need to know about.
The builder must have finished building your home so that it is ready to live in by 31 December 2022. This is known as the practical completion.
If you plan to use the scheme, it is important to check with your housebuilder and solicitor that you will be able to meet all of these deadlines.
Why is this happening?
Help to Buy equity loan was only ever intended to be temporary scheme.
When the government announced plans for the second phase of the initiative, which included limiting it to first-time buyers and introducing regional price caps, it made it clear it would run from 1 April 2021 to 31 March 2023.
There are currently no plans to extend or replace it.
What other help is available?
The good news is that while Help to Buy equity loan may be ending, there are still a number of government schemes available to help both first-time buyers and those trading up the housing ladder.
- Both first-time buyers and home-movers who have only a 5% deposit can use the mortgage guarantee scheme to borrow 95% of their home’s value.
- Meanwhile, First Homes, helps first-time buyers, key workers and local people to purchase a home at a 30% discount to its market price.
- And Shared Ownership enables people to buy a share in a property and pay rent on the rest.
- First-time buyers saving for a deposit can also use the Lifetime ISA, under which you can save £4,000 a year. The government then adds a 25% bonus – up to a maximum of £1,000 annually – for free. The money must be used to either purchase a first home or for retirement.
It is also worth remembering that first-time buyers are exempt from stamp duty on the first £300,000 of a home purchase on properties costing up to £500,000.
