#TuesdayTips – preparing to purchase with Help to Buy
Posted 17 November 2015 by Keith Osborne
The Help to Buy scheme has already assisted tens of thousands of people in England, Wales and Scotland to purchase a home without having to find the huge deposit usually required to do so.
Figures from the Mortgage Advice Bureau this summer revealed that the average home purchase required a down payment of around 30%. Based on a national average price of about £186,000, that equates to a deposit of approximately £56,000 – feasible if you’ve got equity in an existing property but much more difficult for the average first-time buyer, especially if they don’t have the ‘Bank of Mum and Dad’ to rely on.
With two options – equity share and mortgage guarantee – there’s something to suit buyers of new homes and resale property, and the scheme is open to first-time buyers and home movers regardless of their earnings, and the deposit requirement is only 5% to 10%.
It’s not all about the money, though, and if you think that this scheme can assist you, take the time to heed the advice of the team at Help to Buy North West, who have given us their top five tips for anyone hoping to purchase a new home with Help to Buy...
Find your property
Help to Buy is all about helping you get on the property ladder and purchase that dream home – so make sure you do your research and know which developments are offering Help to Buy in your area. Visiting different schemes will help you get a feel for what’s on offer, and also what property your budget can secure you. For Help to Buy properties, you can use our dedicated Help to Buy search page.
Know the costs
It is always recommended that you speak to an IFA (Independent Financial Advisor), as they can advise you on the best route to take according to your individual circumstances and confirm that your financial position is secure. Some developers will recommend an advisor to you, but it’s up to you who you choose. Make sure you have funds to pay a reservation fee if this is required (maximum £500), a deposit on exchange of contracts of at least 5% of the full purchase price (some main mortgage lenders may require higher deposits), and other fees on completion (e.g. stamp duty, legal fees).
Get your Help to Buy paperwork together
To make the process as smooth as possible it is a good idea to know what paperwork lies ahead.
If you’re planning to buy using the equity loan then there is some specific paperwork you should be aware of. Once you have reserved your property you should send a copy of the reservation form, along with your Help to Buy ‘Property Information Form’, to your local Help to Buy agent. If you’re using an IFA they will usually help with all of this.
Both of these forms must be in place before your application can be processed – this should take around four working days.
Have a good solicitor/conveyancer in place
At this stage in the application process your ‘Authority to Proceed’ will be sent out, along with your legal documents, to you and your solicitor/conveyancer. They will check that your mortgage offer, property price and available funds are consistent with the Authority to Proceed, and will then request permission to exchange contracts with the Local Help to Buy agent.
Plan for the future
Once you have moved in to your brand new home the Post Sales Agent will be able to assist you with any queries relating to your equity loan.
Look out for our tips on finding a solicitor for buying with Shared Ownership next Tuesday on Whathouse.com