The UK government first launched the Help to Buy scheme in April 2013 - offering borrowers an interest-free (for five years) equity loan equal to up to 20% of the value of the property. In London, the scheme is even more generous, granting borrowers an interest-free equity loan of up to 40%.Through the scheme, potential buyers can hope to purchase their home with just a 5% deposit - with mortgage lenders funding the remaining 75% (or 55% in London).In November 2018, the government announced it would be extending the Help to Buy scheme by another two years to run from April 2021 to March 2023. It also stated it does not intend to introduce a further scheme after March 2023.But why are we telling you about this now?Next year will be the last opportunity for all buyers to benefit from the Help to Buy scheme in its current format.As with the current scheme, the government will continue to lend buyers up to 20% (40% in London) of the cost of a newly built home under the new plan. However, as of April 2021, the scheme will be restricted to first-time buyers only and include new regional price caps - drastically reducing the maximum value of homes that can be bought with the help of the scheme.At the moment, anyone moving to a newly built home and taking advantage of the Help to Buy equity loan will be able to boost their purchasing power and buy a property worth up to £600,000. But after 2021, only London first-time buyers will still be able to purchase new properties up to this value and property prices will also be capped across the South East.
