CBRE guide to Help to Buy

As more people look to get on to the housing ladder and buy their first property, we've drawn up a CBRE guide on how to make the most of the UK government's Help to Buy scheme, with handy tips and hints on how to benefit. 

The government initiative was brought in to help people in the UK to invest in their own properties and many have now taken those first steps into property ownership as a result. At the same time the scheme is one that many are still unsure of, partly because they don’t fully understand how the three different Help to Buy schemes work. 

Help to Buy ISA – What does it mean?

The government’s Help to Buy ISA works in the form of a savings account in many ways. When you open an account you’ll be required to deposit up to £1,200, saving up to £200 each month and you’ll need to have saved a minimum of £1,600 before you can receive the £400 minimum bonus from the government which could rise up to £3,000.

They are available from a number of banks and building societies around the UK and the most important thing to note is that they are available to each first time buyer, not a household. This means that, if you’re looking to buy with your partner, you can both apply for the accounts doubling the bonus you would receive from the government meaning that you could receive as much as £6,000 towards your investment in your first property.

Obtaining this government bonus is slightly more complicated, however, as you will need to instruct a solicitor or conveyancer to make the application for you. When successful this will be put towards the payment and it cannot be transferred to cover the cost of solicitors’ or estate agents’ fees.

Help to Buy Shared Ownership – What does it mean?

It’s not easy to afford a mortgage, even if you are fortunate enough to be approved for one. If you believe that you can afford to pay a sizable portion, but not the complete mortgage amount, then the government’s Help to Buy: Shared Ownership scheme could be the solution.

Rather than having to pay 100 per cent of the mortgage, you could buy a share of the property, between 25 and 75 per cent, and pay rent on the remainder. You could then buy more of a share in the property if your circumstances change in the future.

To be eligible to apply for a Shared Ownership arrangement you have two criteria to meet. Firstly, the household must earn £90,000 a year or less if you live in London (this drops to £80,000 a year or less outside the capital); and secondly you must be first-time buyers.

There is also additional help for potential buyers who have any kind of long-term disabilities, and for the over 55s who can buy up to 75 per cent of the property and will not have to pay rent on the remaining 25 per cent.

Help to Buy Equity Loan – What does it mean?

A Help to Buy Equity Loan involves borrowing up to 20 per cent of the cost of a new-build property from the government, (with no loan fees for the first five years), meaning that you would have to contribute just a 5 per cent deposit on the property and a 75 per cent mortgage.

There’s an added bonus for those living in London, with the government increasing the upper limit for the equity loan in 2016 to reflect the current house prices within the capital. Rather than borrowing 20 per cent the London Help to Buy offering means that you could actually borrow up to 40 per cent to buy a home in London.

If you then chose to sell the property you would be required to pay back the percentage that you borrowed from the government. If you borrowed 20 per cent this means that you would receive 80 per cent of the sale price (from the mortgage payments and the deposit you put down initially). 

Top Help to Buy Tips from CBRE

Georgina Pope, a Senior Sales Negotiator here at CBRE, has provided some top tips for anyone considering a Help to Buy opportunity on one of our properties. “My first tip would be to obtain an Agreement in Principal (or an AIP) from a mortgage broker. This will allow buyers to move quickly if and when they place an offer on a property.

“This also means that you will have proof of funds when estate agents and vendors ask for it, saving everyone a great deal of time when an offer is submitted. Also, make friends with estate agents for up-to-date property listings - this way you will have the latest update on availability on certain properties and locations.”

In the meantime, if you’re looking to buy any of our properties in London – then please get in touch with a member of the CBRE team who will be happy to help.