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Your April market update: New Help to Buy and 5% deposits launch

What are the changes to the Help to Buy? Why are we hearing about 5% deposits *again*? Strike is here with your April market update.

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The housing market has been a bit of a rollercoaster since last year’s first lockdown. Prices have been going up, a stamp duty holiday was announced and then extended — with demand continuing to rise and rise. But while that boom was a huge windfall for some, others found that the only mortgages they qualified for started disappearing or that they couldn’t seem to make the huge savings the stamp duty holiday offered in time.

And now, even more changes to the market are making an appearance — like a revamped Help to Buy scheme and those 5% deposits finally debuting on the market. So here’s your April market update — because you’re not the only one having trouble keeping track of it all. 

The Help to Buy scheme is revamped

You might remember the Help to Buy scheme — and maybe you even used it. A government initiative that started in 2013, it gave an equity loan that allowed you to buy a new-build home with a smaller deposit (as low as 5% — but different than the other 5% deposit scheme we’ll talk about in a moment). The idea was that the equity loan would help those who were having trouble saving up a deposit.

And for some, it did — but there were also some people who weren’t a fan of the scheme. Firstly, there were claims that it inflated house prices, ultimately making it more difficult for some people to get on the ladder. Secondly, many thought that those taking advantage of the scheme were people who didn’t actually need help to buy a home in the first place.

“The government’s most recent figures show that nearly a third (30%) of Help to Buy users to date had average household incomes of more than £60,000, while a further one in 10 (12%) had incomes of more than £80,000,” Which? reports

So the scheme has changed slightly. Now the scheme is only open to first-time buyers. They can benefit with a Help to Buy: Equity Loan, subject to eligibility, terms and conditions. It will also have a regional cap on the house prices you can buy with the scheme, depending on the average prices in that region. So for example, in London you can use the scheme to purchase a home up to £600,000 — in Yorkshire and The Humber, it’s £228,100

Ideally, by targeting first-time buyers and capping the price of the home, Help to Buy will be more focused on people who actually need help to get on the property ladder. (Interested? Find a Help to Buy agent.)

Essentially, both of these updates will make it easier to get on the housing ladder if saving for a deposit is proving difficult."

Government-backed 5% deposits make their debut

We’ve talked about the government-backed 5% deposits before — they were announced in the latest budget and made quite a splash. Though lenders sometimes do already offer 5% deposits, they were hard to come by as prices and demand rose last year. This new scheme means governments will help guarantee those loans, encouraging lenders to make them available.

As of this week (April 19th, to be precise) the scheme is officially open — big lenders like Lloyds, Santander, Barclays, HSBC and NatWest are already launching mortgages under the scheme, with others like Virgin Money following next month.

Want to learn more? Check out the government’s website for all of the details.

Essentially, both of these updates will make it easier to get on the housing ladder if saving for a deposit is proving difficult. With high rents and costs of living, saving 10% or 20% of the purchase price as a deposit may feel out of reach, so schemes like these can be lifesavers in making that first step. That being said, it’s always important to do your research — every scheme has its positives and negatives and getting on the property ladder is a huge step, so it’s important to make the right decision for you.

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