Help to Buy - a key to the next rung of the property ladder
For many purchasers, making that step up from a first home to something more spacious can seem an impossible feat. However, with Help to Buy ‘second stepping’ could be much more affordable than you think…
14 May 2019
The government-backed Help to Buy initiative is often thought to be just for first time buyers, but it is available to existing homeowners too, and it could help soften the financial blow of stepping up the property ladder.
The latest ‘Second Steppers’ Report from Lloyds Bank revealed that nearly two thirds of those looking to move are finding it harder to move up the property ladder than to get on it, with many now relying on financial help from family and friends to make the jump from their first home.
The report claims that as well as using equity from their current property, over one in five second steppers will look to borrow from the Bank of Mum and Dad to raise the deposit required to fund their next move.
How does it work?
The government provides a loan of up to 20 per cent of the property price (40 per cent in London), which is interest free for the first five years.
Under the scheme, properties can’t cost more than £600,000 in England and £200,000 in Scotland, but there’s no cap on household income.
What’s more, by lowering the proportion of borrowing (thanks to the government loan), buyers can often access better mortgage deals.
Help to Buy helped us twice…
Having used the Help to Buy scheme to purchase their one-bedroom flat as first-time buyers, they knew they could use the scheme again to help them secure a dream family home, so long as it was a new build.
They were enticed by CALA’s Homes’ Clover Gate development in Potton, Bedfordshire, due to its ideal location – being near to where they work – but in a quieter, more rural area, which they felt was a good place to raise a family.
Yuksel said, “Our son is now five and our previous one-bedroom flat was beginning to feel restrictive and too small for our growing family. Out of curiosity, I popped into the CALA Clover Gate sales office to be greeted by helpful and friendly staff who showed me round a lovely three-storey home, which I knew would be perfect for my family.”
Using Help to Buy, the family committed to purchasing the brand new three-bedroom, semi-detached home.
Yuksel said, “We used the Help to Buy scheme on our flat, which was also a new build, five years ago. The scheme really helped us onto the property ladder. So when we realised we could use it for a second time round, it was a no-brainer and we made the decision then to purchase another new build home.
“The scheme has once again surpassed our expectations and enabled us to purchase a lovely family home, which we otherwise probably wouldn’t have been able to afford. CALA Homes recommended a mortgage advisor who came to our flat to run through all of the paperwork, and that’s where our involvement ended. They took all of the admin into their own hands, meaning we could use the scheme without any of the hassle of having to liaise between all the different parties.”
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*YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Visit cala.co.uk/terms for full details.