Help to Buy equity loan applications can no longer be submitted. There are many people who have applied for these… and they are now stuck.
There are few specified milestones that have to be achieved by specific dates in order for you to use the scheme. You have move in by a certain date as well as the property has to be built by a certain point in time.
Many are currently finding themselves in a situation outside of their control. They have applied on time however the builders haven’t finished their bit. At the same time, some have already paid money for valuations, solicitors, mortgage advisors, etc.
There are some good news if the above is a rough description of the situation you are currently in.
what is help to buy equity loan
First thing first – you can no longer apply to the scheme. What the scheme was helping people with – getting on the property ladder in a significantly more affordable way.
The way the scheme worked – you could borrow 20% off the property value interest free for the first 5 years. This jumped to 40% in London.
You would then need to get a mortgage for the remaining balance with a standard lender. On top of that – you are only required to have 5% deposit.
One requirement that didn’t work for some – the property had to be a new build. These are often more expensive than properties on the second hand market.
Flip side to this – new build properties are normally more energy efficient. Also, you mostly get a warranty when you are the first owner of a property.
If you want to learn more about what equity loans was – read this article.
what timelines you have to be aware of for help to buy?
On top of the above there are some key dates that need to be met. These are:
- October the 31st 2022
- December the 31st 2022
- March the 31st 2023
One will ask – why are the dates so significant? In simple – there are steps that need to be complete on or before these dates. If you miss these – you can no longer get the property through the scheme. For many that would be the end of buying the property.
31st of October was the date when you had to submit your application by. No new applications were accepted after that. Let’s assume you made this date. The next 2 dates are critical for you.
31st of December does not apply to everyone. Theoretically however you could make an offer on an off-plan property. That’s a type of property that has been planned and is being built. The key here is – it hasn’t been finished yet.
What this rule said – the property would need to be completed and ready for you to move in by no later than 31st of December. Due to some building material and labour shortages – many properties have been delayed to be completed.
What this means – people could lose the chance to buy the property through the scheme. The worst part – they would lose a chance to benefit from the scheme altogether.
As a result – many started cancelling their applications. YOU SHOULDN’T DO THIS YET!!!
The last date – 31st of March is when your legal side of purchase needs to be finalised by. This is something your solicitor will be able to help with.
you said there were good news?
What the government has been looking into lately – extend the date the property needs to be built by. Currently, the date is being proposed to move back by a month.
This would mean that the property needs to be ready to be occupied by the 31st of January 2023. You don’t need to move in at this date though as you have up to end of March to finalise the purchase.
The only condition to this – your builders/developers would need to notify the body who run the scheme by no later than 20th of December. This only extends one of the deadlines by a month. The rest remain the same as before.
There are currently rumours however – the government might potentially also extend the 31st of March legal deadline. This however hasn’t been confirmed officially yet. I would suggest planning as if you had to complete by the 31st of March.
summary
Help to Buy Equity Loan was a great scheme to help people get on the property ladder. Unfortunately this has now ended with no plans to replace this with anything else.
If you have started the process – please do not end it yourself even if you believe that you aren’t hitting the deadline of the 31st of December. This is most likely being pushed back.
While there are rumours that the completion deadline might be extended as well – this currently isn’t guaranteed.
The scheme currently in the market to help people get on the property ladder that you can still explore – Lifetime ISA. You can learn more about LISA here and open an account with many providers. One example of this is here.