Help to buy

Since April of this year buying a property has been made easier for first time buyers and those needing help to move up the housing ladder by the introduction of the Help to Buy Equity Loan Scheme.

The Scheme is a Government initiative to assist people buying a new build property from a registered developer, whether you are a first time buyer or an existing homeowner, up a maximum purchase price of £600,000.

The Government, through the Homes & Communities Agency, will give you an equity loan of between 10%-20% of the value of the property you are looking to purchase. This is then secured as a second charge against the property in favour of the Homes & Communities Agency and will represent a percentage of the value of the property when you come to pay back the loan. For example, if your equity loan is for 20% at the time you come to sell the property you will repay 20% of the market value of the property at that time. So if the value of your home increases the amount you pay back also goes up, likewise if the value of your home decreases then the amount you pay back goes down.

There is no interest payable on the equity loan for the first five years. From the sixth year you will then start to small monthly fee. You must repay the equity loan within 25 years, or when you come to sell the property, whichever is the sooner.

The application process is dealt with by the developer and your financial advisor at which time you will complete a Property Information Form which will then be submitted to the Help to Buy Agent for approval. Upon being accepted an Authority to Proceed pack is then issued to the buyer, the developer and the solicitor/legal representative acting for you in your purchase. This Authority is then valid for a three month period and an exchange of Contracts must be done within this period.

There are then various issues for your solicitor to deal with on your behalf, the most important aspects are as follows: -
 

  • Within the Authority to Proceed is the Equity Charge, the solicitor/legal representative will explain the implications of the Equity Charge to you and arrange for you to sign the same.
  • Upon receipt of your mortgage offer, the solicitor will submit a Solicitor Form 1 to the Help to Buy Agent, together with a copy of your mortgage offer and valuation to obtain an Authority to Exchange. This must be submitted to the Help to Buy Agent at least 5 working days prior to the anticipated exchange date.
  • Once the Authority to Exchange is issued, Contracts can then be exchanged which will then commit all parties to the transaction. This will then fix the completion date, or if the property is not build complete then an estimated build date will be given.
  • There are then further requirements your solicitor must complete prior to the completion date with the Help to Buy Agent together with then dealing with registration of the property and equity loan at the HM Land Registry following completion of your purchase.
  • The Government's Help to Buy Buyers Guide is available for download from the Homes & Communities website and contains lots of helpful information and scenarios. This can be found at; http://www.homesandcommunities.co.uk/sites/default/files/our-work/help_to_buy_buyers_guide_sept_2013.pdf

The Help to Buy agent for the Shropshire area is Orbit and there are more details of participating developers, together with further information on their website; www.orbithelptobuy.co.uk.

For further information regarding the Help to Buy Scheme or how we may be able to assist you with any property matters, please contact Sarah Smith at our Telford office on 01952 297979 or sarahs@terry-jones.co.uk.


 

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