Wednesday, 22 October 2014

My Help to Buy Scheme Experience- Getting Informed

In May 2014 I bought a house. That still feels really odd to say and extremely grown-up, but I actually managed to buy a cute little 3 bedroom semi-detached house in Berkshire, England.

My partner and I saved hard for about 2 years before we had anywhere near enough money to consider it a suitable deposit for anything larger than a wheelie bin round the back of Tesco carpark, so when we reached that £10k 'indabank' mark it started to feel pretty real. However, we both live and work in Berkshire which meant that when we started looking at areas and properties we felt were right for us we were pretty much crushed. We found 2 bedroom flats for £230,000 and 2 bedroom houses for £260,000 which of course when you're working off the standard deposit amount of 10% equates to us needing about £23k in savings. The solicitor fees equalled about £6000 and the "other bits" (land searches, house insurance, life insurance and other mandatory bits of paper) added another £2000 to this shitstorm equation.

Call me a basic bitch, but I don't exactly have 31 THOUSAND POUNDS sat in the bank. I probably don't have 31 pounds in the bank for the majority of the month. I was pretty sure that I was destined to rent crappy flats with broken boilers until my dying days.

2 months later The Guardian made me aware of a new government scheme launching called "Help to Buy". This is a government scheme (yup, I was also apprehensive) where you essentially apply for an equity loan. This means that you save up a 5% deposit (5% of the value of the asking price for the house) and the government puts in 20% of the purchase price as an equity loan. An equity loan is defined by Wikipedia as "The term used to describe additional borrowing, normally secured as a subsequent charge, as a top-up to the amount a home owner/purchaser can borrow from a main mortgage provider". Essentially, the equity loan removes a lot of the risk for the mortgage provider (typically a high street bank or building society) and means that you are required to save up considerably less for your property. There are still a lot of surplus charges (those pesky solicitor and search fees) but that £23k savings pot turns into a much more realistic £11.5k which by this point was pretty much what we had in the box under the bed.

The Help to Buy site (http://www.helptobuy.org.uk/) has posted this handy little graphic below for your eye-pieces:

help-to-buy-equity-loan-example

There were a few caveats to being eligible for this loan. The website states:

  • The home you want to buy must be newly built with a price tag of up to £600,000

  • You won’t be able to sublet this home or enter a part exchange deal on your old home

  • You must not own any other property at the time you buy your new home with a Help to Buy equity loan

  • This scheme is available in England only

Interestingly, both first time buyers and existing home owners can take advantage of this scheme which is fairly uncommon.

We started the process of looking into areas where we might want to live and settled on an area that was pretty dodgy & quite near a sex shop (hey, this is Berkshire, I'm not a millionaire) but it was affordable and very close to a KFC- both of which were very high up on my "new house ticklist". Next post: filling out the bloody bloody damn hot damn forms & getting approved!
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