It’s near impossible to get onto the property ladder today. Property prices are more often than not, on the rise, and so first time buyers coming into the market are going to have a very tough time getting on the ladder.

And so that’s why the government introduced the Help to Buy initiative.

What is it?

In short, it is a government initiative designed to help first time buyers. The aim is to enable individuals to get hold of financial help in purchasing their home, providing that they reside in England and cannot finance the purchase themselves (which is most first time buyers).

How does it work?

The government is giving out interest free credit over five years to help you on your way. That’s the Help to Buy scheme put simply.

The equity loans are available to anyone looking to buy and live in a new-build worth up to £600,000. Candidates must be in a position to finance at least 5% of the purchase price of the property, and then the Government will offer a loan of up to 20% of the price, while the remaining balance will be financed through a mortgage.

It is interest free for the first five years and after that, a fee of 1.75% of the value of your loan will start. The payable fee will increase every year by the change in the retail prices index plus 1%. You must repay the full 20% if the Help to Buy loan on the same day of your mortgage ending, or when you sell the property. Although you’re committed to repaying the percentage contribution you received at market value when selling, even if the value of your property falls dramatically, you won’t have to make up any shortfall in the equity.

For those looking to take those important first steps onto the ladder, the Help to Buy scheme is certainly an exciting prospect. Just make sure you take time to research it before you go ahead.

And when moving day does come around, don’t forget to give us a call!