What was Help to Buy?
- Affordable deposits: One of the most significant benefits of the Help to Buy scheme is that it enables first-time buyers to get onto the property ladder with just a 5% deposit. Whereas with new build properties, previously many lenders wanted in excess of 15% available as a deposit.
- Access to better mortgage rates: Another benefit of the Help to Buy scheme is that it enables buyers to access better mortgage rates. With the government providing a 20% equity loan, lenders are more willing to offer more favourable rates due to having an overall lower loan-to-value mortgage, which can help to reduce monthly payments and make owning a home more affordable.
- Reduced initial costs: As the equity loan only cost£1 per month for the first 5 years it offered a cheaper start to life for many homeowners, with interest rates as high as they are at the moment this could be a welcome relief to any wannabe homeowners.
- Limited availability: While the Help to Buy scheme offers many benefits, it is only available on selected new-build properties. This means that buyers may have limited options when it comes to choosing a home. Additionally, some developers may choose not to participate in the scheme, further limiting the available options.
- Repayment requirements: While the government provides a 20% equity loan, this is not a gift but rather a loan that must be repaid after five years or when the property is sold. This means that buyers may face additional financial pressure in the future, as they will need to repay the loan while also paying off their mortgage.
- Potential for negative equity: Another potential drawback of the Help to Buy scheme is the potential for negative equity. If property values fall, buyers who have taken out an equity loan may find themselves owing more on their property than it is worth. This can be a significant financial burden and may make it difficult to sell the property if necessary.
In conclusion, the Help to Buy scheme offered many benefits to first-time buyers in Norwich, including affordable deposits and access to better mortgage rates. However, it is important to consider the potential drawbacks, such as limited availability, repayment requirements, and the potential for negative equity. Although nothing formal is laid out on if and when it will return and what version of it will be available. It would still be a welcome return to many first time buyers.