Too many prospective buyers still confused about Help to Buy

15 August 2016

It’s been around for more than three years and has helped thousands of prospective buyers – the majority of them first-time buyers – purchase a new-build home.

Yet many remain confused about how England’s Help to Buy: Equity Loan* scheme works and could be missing out on its assistance, says developer Lovell, which sells more than half of its new-build homes nationally through the scheme.

“The popularity of the Help to Buy: Equity Loan scheme is demonstrated by the number of people using it,” says Lovell regional director Kate Rees. “By allowing them to get more for their money, it enables purchasers to buy the home they really want, rather than settling for something that doesn’t quite meet their needs. But despite the advantages it offers, too many misconceptions still exist. We find that lots of people who come to look at our homes aren’t clear about how it works. What’s also worrying is that some have even been given incorrect information by independent financial advisors, suggesting a more widespread lack of understanding in the industry.”

Two out of three properties sold by Lovell in the South West this year were bought using a Help to Buy: Equity Loan which enables homebuyers to access a 20 per cent loan (which is interest-free for the first five years) from the Government towards the price of a new-build property. The buyer pays a five per cent deposit and takes out a mortgage on the remaining 75 per cent.

Yet Lovell’s Kate Rees says the company’s sales teams find many prospective buyers are not aware of who it is for and how it can help: “Some people don’t think they are in a position to buy a home while others come to us with a budget in mind and then are taken aback at the size and standard of home they can buy if they use the Help to Buy: Equity Loan scheme.

“A common misunderstanding is that the scheme is only for first-time buyers when in fact it’s also available to existing homeowners looking to move. Although it’s true that most people using Help to Buy are first-time purchasers, the scheme is not just restricted to people taking their first step on to the property ladder.  Because it works by enabling purchasers to take out a 75 per cent mortgage on their new home, it can be an excellent way of securing a new home with the space you need.” In England, the Help to Buy: Equity Loan is available on new-build properties worth up to £600,000.

Current homes available from Lovell using a Help to Buy: Equity Loan in the South West include three individually designed exclusive apartments at its Repton Grange development in Brentry, north Bristol.

These homes – the final three apartments available for sale at fast-selling Repton Grange – are
located in Phoenix House, an historic building dating from around 1900 which has been sensitively restored and converted with the accent on luxury and attention to detail. Homes here possess all the character and style that come with a period property but with the added advantage of high-specification contemporary interiors. The apartments also benefit from allocated parking and access to an attractive communal landscaped garden.

A one-bedroom apartment at Phoenix House is now available at £235,000. That means if you bought this property with a Help to Buy: Equity Loan, using a five per cent deposit, you would be able to access a Government loan of £47,000 leaving you to find a deposit of £11,750 and a mortgage loan of £176,250.

Lovell also has for sale a two-bedroom apartment at £265,000. Using a Help to Buy: Equity Loan of £53,000 from the Government, this property could be yours with a five per cent deposit of £13,250 and a mortgage loan of £198,750.

In addition, a two-bedroom apartment at Phoenix House is available at £315,000. If you bought this home with a Help to Buy: Equity Loan, using a five per cent deposit, you would be able to access a Government loan of £63,000 meaning you would then have to find a deposit of £15,750 and a mortgage loan of £236,250.

Lovell’s principal recommendation to homeseekers unsure about Help to Buy is to consult a reputable independent financial advisor.

“The main advice we would give is to speak to a financial advisor with experience of new-build homes and a good knowledge of Help to Buy and how it works,” says Lovell’s Kate Rees. “We can readily put homeseekers in touch with a reliable independent expert. Our sales team also have extensive experience of helping people, both first-time purchasers and people who are already homeowners, use the scheme. We’re always ready to give advice and talk people through how Help to Buy works and how it can benefit them.” Lovell publishes its own Help to Buy guide

To find out more about homes available at Repton Grange through the Help to Buy: Equity Loan scheme, please call the sales team on 0117 321 5690. The marketing suite at Repton Grange, Brentry Lane, Brentry, Bristol BS10 6RG is open daily, on Monday from 11am to 4.30pm, on Tuesday to Saturday, from 10.30am to 4.30pm and on Sunday, from 12pm to 4.30pm.

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