Mortgage Help 2024 after Help To Buy Scheme Ended March 2023

Published / Last Updated on 25/01/2024

There has been speculation this week that the government may introduce a 1% Deposit Mortgage Scheme for First Time Buyers in the Spring Budget on 15 March 2024.

See: 1% Deposit Mortgage

This video update on the Help to Buy Mortgage Deposit Scheme, first shot 10 years ago, was already planned a revisit but the speculation this week has bought it forward by a week or so. 

Help To Buy Scheme Details

  • 01/04/2013 - Help to Buy scheme launches.  New build property only.  Open to all buyers.  5% LTV deposit, 20% LTV government deposit.    After 5 years, the government deposit must be repaid in proportion with any increase in the property’s value.  Maximum purchase price £600,000.
  • 01/02/2016 - Help to Buy extended in London with a 40% government deposit available.  All other criteria remain unchanged.
  • 31/05/2021 - Help to Buy scheme should have ended but was extended to 31/03/2023 with First Time Buyers only now but all other criteria remain unchanged.
  • 31/03/2023 - Help to Buy scheme ended.                               

The Help to Buy scheme is no more, so what help is out there now if you are ‘trying to get on the property ladder’?

A.  Right to Buy Scheme

Originally launched by Margaret Thatcher as part of the House Act 1980 and still available today.  Mrs Thatcher may have inspired a generation of new homeowners but also enabled the offload of many older local authority owned properties built in the 1950s (and in need of repair) thus avoiding costs for local authorities.

  • Council property must be your main home.
  • Council property must self contained.
  • You must be a secure tenant or have had a ‘public sector’ landlord for a minimum of 3 years (does not need to be consecutive years).
  • Maximum property purchase price discount is currently £96,000 (£127,900 in London).

B.  The First Home Scheme

A scheme where property developers offer discounts on ‘new build’ property purchases of between 30% and 50% off the market value purchase price.

  • New build only.
  • Minimum mortgage on property 50% loan to value.
  • Minimum age 18 years.
  • First time buyers only.
  • Property must only be available to specific groups of people e.g.:
    • Section 157 Housing Act 1985 – e.g.  locals, NHS workers, Military/Ex-Military personnel etc.
    • Section 106 The Growth and Infrastructure Act 1990 where local authority planning approval will only be given for properties that can only be bought and sold by local residents.

C.  Shared Ownership

Shared ownership has been around for many years where property developers and some housing associations build property that you only need to buy a share of the property and rent the remainder.

  • Initially you must buy between 25% and 75% of the value of the property.
  • Rent on the balance is capped at a maximum of 3% of the market value of the rented share and can be increased by RPI plus 0.5% pa.
  • Usually there is a time limit e.g.  4 years before you can buy further shares in the property.

D.  Mortgage Guarantee Scheme

A government scheme that underwrites (insures) lenders that have signed up to the scheme to lend more that they normally would.

  • Mortgage lenders can lend up to 95% of the purchase price (usually where their maximum LTV is 75%) and the government will insure them against bad debts/losses if borrowers get into difficulty.
  • Lenders must have signed up to the Mortgage Guarantee Scheme to lend at 95% to be protected.
  • Maximum purchase price £600,000.
  • Mortgage applications must have been made by the 31 December 2023.  i.e.  the scheme is now closed.

E.  Lifetime ISAs (LISA)

  • First Time Buyer savers aged between 18 and 40 yrs.  can save up to £4,000 pa and receive a 25% government bonus (maximum £1,000 pa).
  • Maximum purchase price £450,000.
  • The LISA must be used as a deposit to a new home by age 40 or
  • Can continue to save until age 50, still receive the 25% bonus but the LISA then becomes a ‘tax free’ retirement pension that cannot be accessed until age 55 (age 57 from 2028).

F.  Sole Proprietor Joint Borrower Mortgage

  • Some lenders will allow you to buy the property in your name(s) only but others (e.g.  family members) can be on the mortgage.
  • The none-owning borrowers are still liable to affordability issues and liable for all mortgage payments if the owners do not/cannot afford the mortgage payments.

G.  Family Mortgage

  • If you do not have enough savings for a deposit, other family members such as parents, grandparents, relatives can use their assets as security for the deposit shortfall.
  • Deposit Security by:
    • A security charge e.g.  20% LTV over the family member’s own home.
    • A linked savings deposit account that the family member pays into the account e.g.  20% LTV.
    • A Mortgage Offset savings account where the family member deposits money e.g.  20% LTV but gets no interest on the deposit.
  • The borrower must still pay 100% of the mortgage in full (as the security for no deposit is not a real deposit).
  • After a period of clear, trouble-free mortgage payments with no arrears e.g.  3 years, the charge is removed, or the security deposit is returned to the family member and the borrower continues to pay the mortgage in full as before.

So that’s what help is out there today for people to get onto the property ladder, and we wait for any news on a 1% mortgage deposit scheme in the Spring Budget 2024.

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