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The Government has announced that the Help to Buy (HTB) equity loan scheme is to come to an end on the 31st March 2023. There are no plans to replace this scheme with anything else.
The scheme is only available to First Time Buyers who have a 5% deposit and are buying a new build property. Help to buy will provide 20% (40% in London) of the value of the property as an interest free loan for five years. The balance of the purchase price can be made up either from your own resources or with a capital and interest repayment mortgage.
There is a limit on the value of the property you can purchase with the aid of the HTB loan, and these vary from region to region. For example, in the South West the maximum value of the property is £349,000. In London, it is £600,000 and in the North East it is £186,000
The property must be your main residence.
The loan does not need to be repaid for 5 years, but, after that period, interest will be payable. When you are repaying the loan, it is not the amount that you borrowed that is repaid but the percentage of the value of the property corresponding to the amount of the loan, i.e. if you borrowed the full amount of 20%, the amount repayable will be 20% of the value when you sell or repay the loan. The loan cannot be transferred or ported to any other property.
HTB ISAs are not affected. The bonus payable in this scheme is 25% of the amount that is shown on the closing statement. This bonus can only be claimed if the purchase price is under £250,000 (or £450,000 in London)
You must reserve a new build property and submit an application for the HTB equity loan by no later than 31st October 2022. If there are any changes to the application form (Property information form) after this date, there is no guarantee that they will be accepted by HTB.
The developer must have physically completed the property to be ready for occupation by the 31st December 2022. This is the Practical Completion Date. The property must be habitable and have the new home warranty issued by this time. If the property is not ready, and you have exchanged contracts, you will be unconditionally released from the contract and your deposit (including the reservation deposit) repaid to you.
The final date (the Legal Completion Date) is the 31st of March 2023. By this time, completion of the purchase must have taken place.
For any help with property law and the conveyancing process, you can get in touch with our experts today. You can request a call-back using the form on this page or here. Alternatively, you can email contact@wspsolicitors.com or call us on 01453 847200.
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