If you are in the market for a new house, you will probably have heard of the ‘help to buy’ mortgages. These are Government supported schemes which mean that you need to raise less money for a deposit.
There are two main routes:
Help to buy equity loan
(where the Government effectively owns a part of your home).
This has proved very popular and over 270,000 properties were bought with the Help to Buy: Equity Loan scheme between 2013 and 2020.
Mortgage guarantee scheme
From 19th April, you will be able to buy a home with only a 5% deposit (with certain other rules – such as being a first time buyer and the home being worth less than £600,000). This is to support a lack of 95% loan to value mortgages in the market.
What is Help to build?
Both of the above schemes do not help you if you want to build your own home or if you want to buy a shell and fit it out yourself.
The Government is committed to these alternative routes to owning your own home and has therefore been working at creating an equivalent product for the self-build sector.
We don’t have any details – but here’s what NaCSBA (National Custom and Self-build association) think it could be:
- You apply for a self-build mortgage in the normal way. Instead of needing a deposit of 15-20% (which tends to be normal in these kinds of mortgages) you would only need a deposit of 5%. Everything else happens in the same way as it does with a normal self-build and custom build mortgage.
- First off, you buy the land (at Golden Brick) with some of your money and some of the money from the mortgage lender.
- Then you employ the builders or the custom build developer to build your own home and the mortgage lender pays you to pay them.
- Once the build is complete, the Government pays 20% directly to the mortgage lender to reduce the amount they have lent to you.
When will it be launching?
Government is engaging with the sector to finalise the details so we are hoping that it will be launched soon. Perhaps as early as May 2021.
Who will be eligible?
We’re not sure, but we think that it will be purchasers buying homes for less than £600,000 and it may be restricted to first-time-buyers.
How can I find out more?
At the moment, there are no other details so please register and we’ll let you know as soon as something is announced and we will update this blog post.
Where can I buy a help to build product?
The best places to look are the portals (Rightmove, Zoopla etc.) and you may want to look at the smaller plot-focused sales websites: plotbrowser, plotfinder etc.