Your Options Now the Help to Buy: Equity Loan Deadline Has Passed

The Help to Buy: Equity Loan deadline passed on the 31st October 2022. But what does that mean for first-time buyers who are still looking to purchase a property with government support?

What to do next if you met the deadline

If your Help to Buy application was accepted before the deadline, you can still use the scheme to complete your purchase.

To be considered ‘accepted’ you must have reserved a home with a registered homebuilder and submitted your Property Information Form (PIF) before 6pm on 31st October. You will then receive an Authority to Proceed.

Once you receive it, you will be able to apply for a mortgage. With time running out, you should seek professional advice from a broker who specialises in Help to Buy mortgages. They will guide you through the process and find the best deal according to your circumstances.

When using the Help to Buy scheme, you may hear the phrase Longstop Dates. These are simply the dates by which certain events must happen.

The first of these is 31st January 2023 which represents the date by which your homebuilder is required to achieve ‘practical completion’ (having the home fully built and ready to live in). Your builder must notify the relevant administrator of the scheme by no later than 20th December 2022 that a new-home warranty will be in place by the end of January (previously the first ‘Longstop’ date was to be 31st December 2022 but this has now been revised).

The second Longstop Date is 6pm on 31st March 2023. This is the date by which you must complete your purchase. If not, you will cease to be eligible for an equity loan and will not be able to reapply.

Your options if you didn’t apply in time

If for any reason you were unable to apply before the Help to Buy deadline, don’t worry. Other government schemes are available, and it’s worth speaking to a mortgage advisor to discuss your options.

Alternative schemes are:

Mortgage Guarantee Scheme

Like equity loans, the Mortgage Guarantee Scheme allows you to buy a property with a 5% deposit. To be eligible for this scheme you must:

• Buy a property for no more than £600,000
• NOT be buying a new build property
• Secure a mortgage of between 91% – 95%
• Take out a residential mortgage on capital repayment terms

The deadline for the Mortgage Guarantee Scheme is 31st December 2022.

First Homes Scheme

Aimed at first-time buyers in England, the First Homes Scheme allows you to buy a new-build home at a discount of 30% to 50% of market value. You can buy the home from a registered homebuilder or an existing homeowner who originally purchased the property as part of the scheme.

Eligibility criteria for First Homes include:

• Getting a mortgage for at least half the price of the property
• Household income of no more than £80,000 (£90,000 in London)

Local authorities in some areas have also set their own eligibility criteria for accessing the First Homes Scheme.

These include priority for:

• Key workers
• Existing residents of the area
• Those with specified local connections
• People on low incomes

Shared Ownership

This is a government backed scheme that allows you to buy part of a property from a housing association. It means you can buy with a smaller deposit as you don’t buy the entire property right away.

You will need a mortgage to cover the portion of the property you are buying, and you will pay rent to the housing association on the rest of it. You can then buy more of your home incrementally as circumstances enable you to.

To be eligible for Shared Ownership you must:

• Have a maximum household income of £80,000 (£90,000 in London)
• Not own any other property after completing your purchase
• Not be in mortgage or rent arrears
• Have a good credit history and be able to get a mortgage to cover the purchase

Right to Buy

Existing council tenants can buy their current home from the local authority at a discount.

You will be eligible for Right to Buy if:

• It is your only or main home
• It is self-contained property
• You are a secure tenant
• You have had a public sector landlord for three years

Lifetime ISA

This is a scheme to help you save for a deposit to buy your first home. With a Lifetime ISA, you can save up to £4000 per year which the government will top up by 25% up to a maximum of £1000.

The money must be used to buy your first home or for your retirement.

To open a Lifetime ISA, you must be aged between 18 and 40. If the account is still active when you turn 50, you will no longer be able to pay into it and will not be eligible for the 25% top up.