Property Update - Help to Buy Government Scheme
- Author: David Crosby
- Posted on: 26th January 2014
- Posted in: Blog
At Crosby & Woods we are very pleased to see that both the Bank of England and our politicians could see the need for and the benefits that will follow from taking proactive steps to reawaken a property market that has struggled with lack of confidence and an absence of mortgage lending for far too long. Whilst the help to Buy Mortgage Guarantee Scheme is not a magic cure for all of these problems, nor will it be suitable for everyone looking to buy and sell, it is at least a step in the right direction and will help many people, especially in Brighton & Hove where we have a very large number of leasehold flats, get on to or move up the property ladder. At the moment the Scheme applies for properties up to £600,000 in value but an important caveat to this is that there has been some mention in the respected business press that this figure may be substantially reduced if the Bank of England feel property prices are rising too quickly and want to intervene to stop that. Any reduction, despite the Bank of England’s denial, is in all likelihood aimed at controlling the value of properties in the South of England, including Sussex, and therefore anyone living in the South and who is considering buying using this Scheme should take this risk into consideration when deciding when they want to buy.
In terms of the Scheme, the main benefit of it is that it allows people to buy now with only a 5% deposit. Since the financial crisis started and mortgage finance dried up, most Banks and Building Societies have been only willing to offer a mortgage where a minimum 20-25% deposit was put forward. In practice and with average property prices in Sussex being in the region of £250,000 plus, this has meant buyers have needed to raise at least £50,000 for a deposit. Under the Scheme at 5% the deposit needed now would be £12,500 which whilst still substantial, at least becomes far more achievable. The main criteria for eligibility are (a) the property is up to £600,000 in value (but see comment above), (b) it can be used on all types of property, not just new build property and (c) that it is to be used exclusively for the purchase of your main home only and not a second home or buy to let. Mortgages under the Scheme will be dealt with virtually the same as mortgages not under the Scheme so an applicant will have their income assessed to ensure the product they take out is affordable and they are deemed creditworthy. From an administration and legal perspective, it is not envisaged that using the Scheme will be any different or more onerous for an applicant as most of the paperwork for the government guarantee is dealt with behind the scenes and without the customer needing to be overly involved with that.
To discuss your options under this Mortgage Scheme, and/or to discuss the procedures and financial costs of the conveyancing required to both buy and sell your property, please do not hesitate to call Crosby & Woods Solicitors on 01273 734 600 (or by email firstname.lastname@example.org) and ask to speak to one of highly experienced residential conveyancing experts.