The ‘Help to Buy’ scheme, an initiative launched by the UK Government in 2013 to help people purchase a property, is now the most popular way to buy a house among first time buyers, according to recent research.
In addition to helping first time buyers who are struggling to save a deposit, so they can get onto the property ladder, the scheme helps any eligible prospective buyers looking to buy a home up to the value of £600,000, as long as they can afford to pay the associated mortgage.
Statistics from Ocean Finance – the loan and mortgage firm – have shown that half of first time buyers use either the ‘Help to Buy’ equity loan or mortgage guarantee schemes, to enable them to buy a property.
Following the financial crisis, lenders introduced tougher mortgage rules and most 95 per cent mortgages disappeared.
Borrowers are now expected to have at least a 10 per cent deposit to buy a property, though the average deposit required is actually 25 per cent, which has made home ownership more difficult than in the past.
Rising house prices are also making it more difficult for people to meet the criteria for getting a mortgage.
However, the ‘Help to Buy’ ISA, a saving product dedicated to helping potential homebuyers, will be launched later this year.
Under the new Government-backed ISA, savers will receive contributions up to a maximum of £3,000 towards their deposit.