Homes England have announced that despite the current Help to Buy scheme coming to an official end on the 31st of March 2021, homebuyers will have more time to complete their purchase.
The UK government’s Help to Buy equity loan scheme, which offers buyers a 20% or 40% interest-free loan in lieu of a deposit, has arguably been vital for first-time buyers who otherwise would not have been able to buy.
A final extension has been announced meaning that those in the process of completing on their New Build flat or house with the current Help to Buy scheme, will have until the 31st of May to do so.
Why has Help to Buy been extended?
An extension has been granted for Help to Buy because of delays to homeowners caused by Covid throughout 2020.
As a result of lockdowns caused by Coronavirus in the UK, many buyers have been unable to complete purchases for New Build properties that qualify for the current Help to Buy scheme.
The housing industry as a whole, including those in construction, mortgage brokers and mortgage lenders, have continued to provide their services after an initial lockdown that began in March 2020 and with the extension now permitted, it is hoped that many potential buyers can make the deadline successfully.
Homes England statement on Help to Buy extension
“Help to Buy will end on 31 March 2021, but homebuyers using the current scheme will have more time to complete their purchase. We are extending legal completion to 31 May 2021 due to delays caused by Coronavirus.
This allows an extra 2 months for home builders to complete the build and for homebuyers to legally complete and get the keys to their home.
There will be no more extensions, so we are asking home builders to continue to build at pace. Please check with your home builder and conveyancer that you’re able to meet these dates.”
What happens if buyers don’t meet the new Help to Buy deadline?
The Government said that if buyers can’t meet the legal completion by 31 May 2021, their housebuilder must unconditionally release them from the contract.
Reservation fees should also be refunded if the buyer isn’t able to finalise their home purchase before the current scheme ends.
It’s important to be aware that if however, you have already received an Authority to Proceed from your Help To Buy agent, your homebuilder may be entitled to make deductions from your reservation fee.
You can talk to one of our mortgage advisors on the phone or by using our online chat if you’re concerned about losing your reservation fee in the event that you don’t meet the Help to Buy deadline.
To save you the hassle, they can even chase up the housebuilder and discuss your reservation fee on your behalf.
Do “Early Bird” reservations secure eligibility for the Help to Buy extension?
‘Early bird’ schemes are are not part of the Help to Buy: Equity Loan scheme.
Lots of housebuilders offer Early Bird incentives for those who pre-reserve their New Build plots but these do not count as full reservations.
The legal completion date for your property purchase will be taken from the date you fully reserved with Help to Buy: Equity Loan.
Will I qualify for the Stamp Duty extension if I miss the Help to Buy deadline?
The Help to Buy extension may be ending in May 2021 but Rishi Sunak has announced in his annual budget that the Stamp Duty holiday will be extended an additional 6 months.
Therefore, buyers that miss the Help to Buy deadline could still be able to take advantage of Stamp Duty savings in England and Northern Ireland where the extension has been increased until September.
Subject to mortgage eligibility checks, a buyer could still benefit from avoiding the tax, which can cost other buyers in the UK up to 12% of the property’s value they’re buying.
Can first-time buyers still get a good deal without Help to Buy?
The range of first-time buyer mortgages with high loan-to-value ratios dropped at the beginning of the pandemic but thankfully, there are a number of UK lenders that are willing to provide mortgages with lower deposit requirements, if certain affordability criteria are met.
The 2021 fiscal budget announcement provided exciting new details about a new government-backed 5% deposit mortgage scheme.
Getting onto the property ladder could be about to become more achievable for a lot of first-time buyers that can’t afford a large deposit.
When does the new Help to Buy scheme begin?
Help to Buy 2021-2023 for first-time buyers starts on 1st April 2021 and ends 31st March 2023.
Interested applicants planning on buying a home through the scheme have been able to apply since the 16th of December 2020 and can reserve plots and completed homes with a registered home builder.
Our Help to Buy advisors manage first-time buyer applications for New Build homes every day and can explain the pros and cons of the scheme while considering your unique circumstances.
What is the new Help to Buy scheme for 2021?
The scheme has many similarities with its predecessor and is only available to first-time buyers that are buying a home to be used as their main residence and not for the purposes of buy-to-let.
Eligible applicants must have at minimum 5% deposit of their own but can borrow an additional 20% (or 40% if they’re in London), interest-free for 5 years.
After those five years have passed, the loan is charged at an interest rate of 1.75% and then following the sixth year, the interest on the equity loan will increase by the Consumer Price Index (CPI) plus 2% (1% if you took the equity loan before December 2019).
Here’s how The Mortgage Hut helps FTBs with Help to Buy
We’re an approachable group of mortgage experts with a team of young, old and everyone in between, taking great pride and care in the service we deliver.
Help to Buy is pivotal for lots of first-time buyers which is why our advisors are trained so frequently on the subject.
We work with housebuilders closely and communicate the latest information, deals and incentive opportunities to the people we help, to ensure they get the most out of their experience as first-time buyers.
We also have access to a whole host of 5% deposit Help to Buy mortgage lenders and can check your eligibility for each of the relevant options for you, without affecting your credit score.
Call 023 8098 0304 or get in touch with a Help to Buy expert through our enquiry form.
