Help to Buy Properties in Manchester
Help to Buy in Manchester
Help to Buy is a unique program intended to help first-time buyers buy homes in various parts of the country such as Manchester. The Help to Buy scheme is upheld by the government. It implies that when purchasing another apartment or house, purchasers can apply for a loan up to 20% of the worth of the property. Later they put in a base installment of 5% and can get a home loan that can cover the leftover 75% of the home's price. In 2021, the government Help to Buy program was changed. Earlier every homebuyer could use the scheme while now only first-time buyers can apply for this program.
Korter provides a special filter of Buying Schemes -> Help to Buy, where you can see all the properties that support the Help to Buy scheme in Manchester.
How does Manchester Help to Buy works?
To use this government scheme, you need to remember that only new developments apply for Help to Buy Manchester properties. If your desired house complies with this rule, you can receive an interest-free equity loan for the first five years. After that period, you will be charged an interest of 1.75%. Starting from the 6th year, the interest rate grows every year. You have 25 years to fully repay the loan. If you sell the residential property by then, you still have to pay off the loan. Thus, if you manage to pay off the entire loan within the first 5-year, you can avoid additional interest.
However, the actual value of housing directly influences the size of the loan sum. So, what happens if property costs rise or fall? Your Help to Buy equity loan will rise or fall as well because it depends on the price of your home. For example, if the house costs 10% more, you will have to pay 10% more. This aspect should surely be considered when purchasing Help to Buy Manchester properties.
| Example of Help to Buy in Manchester | ||
| Cost of the home is £200,000 | ||
| Cost name | Percentage of total | £ value |
| Your deposit | 5% | £10,000 |
| Equity loan | 20% | £40,000 |
| Mortgage | 75% | £150,000 |
| TOTAL | £200,000 | |
What are the eligibility criteria for Manchester Help to Buy?
To participate in the Manchester Help to Buy program, you have to comply with the established rules.
Requirements:
- Be at least 18 years old.
- Be a first-time buyer, meaning that you have never owned other real estate or homes, either in the UK or abroad.
- Require at least a 5% deposit of the total purchase price of the house.
- The value of the real estate you are buying can not be more than the regional price cap for your area (see the full list of price caps below).
- You must be able to prove you can afford the mortgage repayments and other outgoings on the property you want to buy.
Not allowed:
- Owning a home or land anywhere in the world at any time.
- To have had any form of sharia mortgage finance.
- Owning a home bought with other people or inherited.
- Being married or in a cohabiting relationship, either now or on legal completion with anyone who owns or has owned a home or land anywhere in the world.
- Purchasing a second home.
Remember:
- Part Exchange is not available through the Help to Buy scheme.
- You cannot sublet your Help to Buy home.
Help to Buy Regional Price Caps
| Region | Help to Buy price cap |
| North West (Manchester) | £224,400 |
| North East | £186,100 |
| Yorkshire and the Humber | £228,100 |
| East Midlands | £261,900 |
| West Midlands | £255,600 |
| East of England | £407,400 |
| London | £600,000 |
| South East | £437,600 |
| South West | £349,000 |
Manchester Help to Buy Repayments
- The initial 5 years after receiving Help to Buy mortgages are interest-free, so it is better to repay the equity loan before the period ends. Otherwise, annually in April, the rate on your equity loan will increase by the Consumer Price Index (CPI), plus 2%.
- In this way, in the sixth year, you will pay 1.75%, in the seventh year, the percentage will be 1.75% + (CPI + 2%) (but if you took out a stock loan before December 2019, it will be + 1%), and this sum will rise every year. That being said, you will pay a £1 monthly fee for management by direct debit, as when you take out a stock loan, you agree to pay back the full, interest and management fees.
- Stamp Duty tax is a property transaction tax. The tax is due to be paid on any property which is purchased at a price of more than £125,000. However, in the Help to Buy scheme only first-time buyers do not need to pay Stamp Duty for properties up to £300,000.
Manchester Help to Buy pros and cons
If the purchaser does not have the total amount of money to purchase the new home, then the opportunity to buy one of the Help to Buy houses in Manchester through a government scheme seems tempting. But before deciding on this step, you need to know more about the advantages and disadvantages of the program.
| Pros | Cons |
| + Full ownership. The buyer owns 100% of the purchased property. | - Only new buildings. Help to Buy houses do not cover resale properties. |
| + Deposit at minimum. The purchaser pays only a 5% deposit the total value of the house. | - Regional worth. Each region offers set prices that should not exceed the price of the purchased house. |
| + 5-year interest-free term. The buyer can manage to pay the worth of the bought property during the first 5 years and not pay interest on top at all. | - Not a fixed value. If the housing property price rises, the buyer pays interest on the new value. |
| + Family income does not matter. The acquisition of Help to Buy real estate does not provide for maximum family income restrictions. | - Rising interest. At the end of the interest-free period, the interest rate increases annually. |
| + 25-year period to pay off the loan. You have ample time before you have to repay the loan in full. | - Remortgage can be a problem. A significant number of remortgage deals are only available to those who have paid off their loan. |
| + Minimum mortgage rates. | - Renovation approval. Before you can start improving your house, you need to get a permit. |
Manchester Help to Buy. How to apply?
If you decide to become a member of the Help to Buy program, here is a small guide on how to do it:
- Reserve the desired home in the new building. Please note that the developer must be registered under the Help to Buy scheme.
- Reach the Help to Buy agent in your region and apply online.
- Wait until the Help to Buy agent assesses your eligibility. Then he will issue an Authority to Proceed.
- Authority to Proceed gives you an opportunity to apply for a mortgage and promote your application prior to exchanging contracts. Then get an Authority to Exchange from Agent Help to Buy.
- Receive a Transaction Confirmation for the legal completion of the construction and the transfer of funds to the developer. The Help to Buy agent will be able to issue this document when all papers and dates are agreed and the house is built.
- After completing the legal process, the Help to Buy agent transfers your information to the loan administrator to manage the loan account until it is paid in total.
Popular locations for Help to Buy
Prices for new buildings in other cities
| Greater Manchester | from £334 / ft2 |
| Milton Keynes | from £349 / ft2 |
| Buckinghamshire | from £581 / ft2 |
| Hertfordshire | from £567 / ft2 |
| Berkshire | from £456 / ft2 |
| London | from £937 / ft2 |
| Essex | from £415 / ft2 |
| Surrey | from £612 / ft2 |
| Kent | from £407 / ft2 |
Prices for apartments in other cities
| Greater Manchester | from £125 000 |
| Milton Keynes | from £214 995 |
| Buckinghamshire | from £195 000 |
| Hertfordshire | from £250 000 |
| Berkshire | from £225 000 |
| London | from £192 000 |
| Essex | from £225 000 |
| Surrey | from £155 000 |
| Kent | from £168 000 |