Help to Buy Properties in Surrey
Help to Buy in Surrey
Help to Buy is a particular government program that helps first-time buyers purchase a home. The Help to Buy scheme permits you to get a credit in up to 20% of the property assessment. The buyer needs to give a deposit of only 5% of the house's value in Surrey. Then, at that point, he gets a home credit to cover the rest of the housing cost. This program was available to everyone but starting from 2021, the government Help to Buy program is open only for first-time buyers.
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 Surrey.
How does Surrey Help to Buy works?
Help to Buy Surrey developments under this program includes only new-build properties. Using the scheme, the purchaser gets an equity loan, which is interest-free for the first 5 years. Then, he starts paying interest at 1.75% in the 6th year. The interest rate rises every year. The buyer has 25 years to fully repay the loan. In the event of a sale, the purchaser must repay the loan as well. Thus, in order not to pay high interest on the loan, it is better to try to pay the entire sum during the interest-free period.
It is vital to remember that the cost of the home affects the loan amount. What happens if property prices rise or fall? As your Help to Buy equity loan depends on the market value of your real estate, any change in its prices can change the amount you have to repay. If the value of real estate rises by 10%, then the interest rate that you need to pay rises following the already new value. It must be considered when deciding if you are going to purchase one of the Help to Buy Surrey properties.
| Example of Help to Buy in Surrey | ||
| Cost of the home is £375,000 | ||
| Cost name | Percentage of total | £ value |
| Your deposit | 5% | £18,750 |
| Equity loan | 20% | £75,000 |
| Mortgage | 75% | £281,250 |
| TOTAL | £375,000 | |
What are the eligibility criteria for Surrey Help to Buy?
To participate in the Surrey 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 |
| South East (Surrey) | £437,600 |
| North East | £186,100 |
| North West | £224,400 |
| Yorkshire and the Humber | £228,100 |
| East Midlands | £261,900 |
| West Midlands | £255,600 |
| East of England | £407,400 |
| London | £600,000 |
| South West | £349,000 |
Surrey Help to Buy Repayments
- The interest-free term for Help to Buy mortgages spans the first 5 years. That is why it is the best solution to try repaying the equity loan before this period ends. Alternatively, every April, the interest on your equity loan will grow by the Consumer Price Index (CPI), plus 2%.
- Therefore, the percentage will be 1.75% in the sixth year. The rate will account for 1.75% + (CPI + 2%) in the seventh year (but if you took out a stock loan before December 2019, it will be + 1%). Under this similar scheme, the interest rate will rise per 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.
Surrey Help to Buy pros and cons
If the buyer does not have the total sum of money to purchase the new home, then the opportunity to buy one of the Help to Buy houses in Surrey through a government program seems tempting. But before deciding on this step, you need to know everything about all the points of the program.
| Pros | Cons |
| + Total ownership. The purchaser owns 100% of the real estate. | - New residential complexes only. Help to Buy houses do not cover resale properties. |
| + Very small deposit. The purchaser has to pay a deposit of just 5% of the value of the bought apartment. | - Regional value. In each region, set prices should not exceed the purchased house. |
| + 5-year interest-free period. The purchaser can pay the cost of the home during the first 5 years and not pay interest on top at all. | - Not a fixed expense. If the real estate cost rises, the purchaser pays interest on the new value. |
| + Family revenue does not matter. The purchase of Help to Buy real estate does not provide for maximum family income restrictions. | - Increasing interest. At the end of the interest-free time, the interest rate rises every year. |
| + 25-year term to pay off the loan. You have enough time before you have to repay the loan in full. | - Remortgage is a question. A lot of remortgage deals are only accessible to those who have paid off their loan. |
| + Small mortgage rates. | - Repair permission. Before you can start improving your property, you need to get a permit. |
Surrey 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 house in the new building. Please note that the developer must be registered under the scheme.
- Find the Help to Buy agent in your area and apply online.
- Wait until the Help to Buy agent assesses your eligibility. After that process, 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.
- Get a Transaction Confirmation, which allows the legal completion of the construction and the transfer of funds to the development firm. The Help to Buy agent will be able to issue this confirmation when all documents and dates are agreed and the house is built.
- After finishing the legal process, the Help to Buy agent transfers your details 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
| Kent | from £407 / ft2 |
| London | from £937 / ft2 |
| Essex | from £415 / ft2 |
| Hertfordshire | from £567 / ft2 |
| Berkshire | from £456 / ft2 |
| Buckinghamshire | from £581 / ft2 |
| Milton Keynes | from £349 / ft2 |
| Manchester | from £366 / ft2 |
| Greater Manchester | from £334 / ft2 |
Prices for apartments in other cities
| Kent | from £168 000 |
| London | from £192 000 |
| Essex | from £225 000 |
| Hertfordshire | from £250 000 |
| Berkshire | from £225 000 |
| Buckinghamshire | from £195 000 |
| Milton Keynes | from £214 995 |
| Manchester | from £160 000 |
| Greater Manchester | from £125 000 |