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.
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|
To participate in the Manchester Help to Buy program, you have to comply with the established rules.
|Region||Help to Buy price cap|
|North West (Manchester)||£224,400|
|Yorkshire and the Humber||£228,100|
|East of England||£407,400|
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.
|+ 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.|
If you decide to become a member of the Help to Buy program, here is a small guide on how to do it: