2013 Budget: 'Help to Buy' details

Published by Brian Church for 24dash.com in Housing and also in Central Government

In words deliberately chosen to make people think of ‘Right to Buy’, the 2013 Budget unveiled a new ‘Help to Buy’ scheme.

The Treasury said: “Help to Buy will make the aspiration of home ownership a reality for more people across the country. The Government will support people who have at least a 5 percent deposit to buy a home through two schemes aimed at increasing the supply of low-deposit mortgages and new housing.”

So what does it all mean? Here are the details (source: HM Treasury, occasional sarcasm: 24housing).

In simplest form, Help to Buy comes in multiple choice format. Option 1 is equity loan and Option 2 mortgage guarantee. There is no Option 3.

Option 1, Help to Buy: Equity loan

• New build only
• Minimum 5 percent deposit to qualify
• This expands the existing First Buy scheme and is now available to all, not just first-time buyers
• The Government will lend you up to 20 percent of the value of your property through an equity loan, which can be repaid at any time or on the sale of your home
• Buyers need to secure up to a 75 percent mortgage from a bank or building society
• The expanded scheme is available from 1 April 2013. It will run for 3 years and provide £3.5 billion of additional investment
• Maximum home purchase of £600,000.

Option 2, Help to Buy: Mortgage guarantee

• New build and existing homes
• Deposit as little as 5 percent for this scheme
• Available to existing homeowners as well as first-time buyers
• You’ll need to secure a mortgage for your purchase. The Government guarantee will encourage lenders to offer better access to low-deposit mortgages
• Available from January 2014, this scheme will run for 3 years
• Maximum home purchase of £600,000