Deadline looms for current Help to Buy scheme, new scheme details announced

Anyone looking to use the current Help to Buy scheme only has until 15th December to apply before it is closed to new applications. Anyone making the deadline then has a further deadline to contend with – their property purchases must complete by 31st March 2021 in order to qualify for the Government backed deposit.

The deadline is particularly relevant for anyone who isn’t a first-time buyer, as the scheme that replaces the current one will exclude anyone who isn’t buying for the first time. The new version, which opens on 16th December this year, will also have regional restrictions on the amount that can be borrowed towards the deposit for a new home.

The Ministry of Housing Communities & Local Government (MHCLG) made the following announcement:

“Applications for Help to Buy: Equity Loan 2013-2021 scheme end on 15 December 2020. First-time buyers eligible for Help to Buy: Equity Loan (2021-2023) can apply from 16 December 2020, with a homebuilder registered for the scheme.”

Any buyer who successfully applies for the Help to Buy Scheme is issued with an ‘Authority to Proceed’ or ATP letter, which is required by the housebuilder as proof of deposit. Any lender providing the mortgage will usually need to see this for the same reason as well. On the latter point, the MHCLG also asks potential applicants for the scheme to seek independent advice around mortgage eligibility as part of the Help to Buy application.

The changes to the scheme will hit ‘next time buyers’ the hardest, particularly those who do not have enough equity in their current homes to contribute to a large enough deposit to buy their new home. Lenders have also tightened on lending to all borrowers since the onset of the pandemic, but particularly to those with deposits of less than 25%. The final blow is the lack of mortgage schemes for those with deposits of less than 15%.

Although some aspects of the new Help to Buy Scheme have been simplified (i.e. first-time buyers only) there are others that are more nuanced. The regional variations on the maximum amount lent for the Help to Buy deposit is the key example. The regional variations are as follows:

Any first-time buyers who qualify for the new scheme following a successful application cannot complete on the purchase until 1st April 2021 following the cessation of the old scheme’s completion deadline. 

In order to obtain an agreement in principle for your Help to Buy application, or to use an existing approved application to buy your new home, Smartr Finance can help and represent you when dealing with the developer.