Help to Buy Properties in Hertfordshire
Help to Buy in Hertfordshire
As an exceptional government program, Help to Buy gives a superb chance to first-time buyers who are hoping to purchase a home. The Help to Buy scheme permits you to get a credit for up to 20% of the property estimation. For this situation, purchasers need to post a security deposit of just 5% of the house's worth in Hertfordshire. Then they get a home loan to cover the excess expense of the home. This program was accessible to everybody. However, since the beginning of 2021, the government Help to Buy program is accessible for first-time buyers only.
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 Hertfordshire.
How does Hertfordshire Help to Buy works?
Help to Buy Hertfordshire includes new builds only. If you buy a home in a new residential complex, you can use the government scheme. In this case, you will receive a loan in the form of a split and will not pay additional interest for the first five years. Starting in the sixth year, you will earn 1.75% interest. These percentages increase annually. For 25 years, you need to repay the loan. If by that time you sell the property, the loan must still be compensated. To avoid paying additional interest, it is best to pay off the entire loan amount within the first five years.
However, remember that the property's actual value affects the loan amount. That is, if the price of real estate falls or rises, the Help to Buy equity loan will change accordingly. For example, if the value of your home increases by 10%, then the interest rate that must be paid will increase by 10%. Consider this if you are considering purchasing Help to Buy Hertfordshire properties.
| Example of Help to Buy in Hertfordshire | ||
| Cost of the home is £275,000 | ||
| Cost name | Percentage of total | £ value |
| Your deposit | 5% | £13,750 |
| Equity loan | 20% | £55,000 |
| Mortgage | 75% | £206,250 |
| TOTAL | £275,000 | |
What are the eligibility criteria for Hertfordshire Help to Buy?
To participate in the Hertfordshire 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 |
| East of England (Hertfordshire) | £407,400 |
| North East | £186,100 |
| North West | £224,400 |
| Yorkshire and the Humber | £228,100 |
| East Midlands | £261,900 |
| West Midlands | £255,600 |
| London | £600,000 |
| South East | £437,600 |
| South West | £349,000 |
Hertfordshire Help to Buy Repayments
- The interest-free period for Help to Buy mortgages covers the first 5 years, so the perfect solution will be to repay the loan within this term. Otherwise, in April annually, the interest on your equity loan will expand by the Consumer Price Index (CPI), plus 2%.
- In the sixth year, you will have to pay 1.75%, in the seventh year, the sum will be 1.75% + CPI + 2% (but if you took out a stock loan before December 2019, it will be + 1%). And following the example, the rate of the Help to Buy mortgage will grow annually. Meanwhile, 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.
Hertfordshire Help to Buy pros and cons
If the buyer does not have the total sum to purchase the new home, then the opportunity to buy one of the Help to Buy houses in Hertfordshire through a government program seems attractive. But before deciding on this matter, you need to know more about the pros and cons of the program.
| Pros | Cons |
| + Full ownership. The buyer owns 100% of the residential house. | - New build houses only. Help to Buy houses do not cover resale properties. |
| + Small deposit. The buyer pays a deposit of only 5% of the total value of the bought house. | - Regional prices. In each region, prices are set, which should not exceed the purchased real estate. |
| + 5-year interest-free period. The purchaser can manage to pay the price of the bought house during the first 5 years without paying interest on top at all. | - Not a fixed worth. If the housing property price rises, the purchaser pays interest on the new cost. |
| + 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 time, the interest rate increases annually. |
| + 25-year period to pay off the loan. You have plenty of time before you have to repay the loan in full. | - Remortgage is a problem. Many remortgage deals are only accessible to those who have paid off their loan. |
| + Minimum mortgage rates. | - Reconstruction approval. Before you can start improving your apartment or house, you need to get a permit. |
Hertfordshire 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:
- Book the desired apartment in the new development after making sure that the developer is registered under the scheme.
- Search for the Help to Buy agent in your area and apply online.
- Wait until the Help to Buy agent estimates your eligibility. Then he will issue an Authority to Proceed.
- Authority to Proceed allows you to apply for a mortgage and promote your application prior to exchanging contracts. Then get an Authority to Exchange issued by 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 issue this confirmation when all documents and dates are agreed and the house is built.
- After completing the legal process, the Help to Buy agent transfers your details to the capital 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
| London | from £937 / ft2 |
| Buckinghamshire | from £581 / ft2 |
| Milton Keynes | from £349 / ft2 |
| Essex | from £415 / ft2 |
| Berkshire | from £456 / ft2 |
| Surrey | from £612 / ft2 |
| Kent | from £407 / ft2 |
| Manchester | from £366 / ft2 |
| Greater Manchester | from £334 / ft2 |
Prices for apartments in other cities
| London | from £192 000 |
| Buckinghamshire | from £195 000 |
| Milton Keynes | from £214 995 |
| Essex | from £225 000 |
| Berkshire | from £225 000 |
| Surrey | from £155 000 |
| Kent | from £168 000 |
| Manchester | from £160 000 |
| Greater Manchester | from £125 000 |