Kirk Hallam Homes

Help to Buy Scheme

Help to Buy

What is Help to Buy?

Help to Buy is equity loan assistance to home buyers from the Homes and Communities Agency (HCA).

Help to Buy makes new build homes available to all home buyers (not just first time buyers) who wish buy a new home, but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage. Up to a maximum of 20% of the purchase price is available to the buyer through an equity loan funded by the Government through the HCA.

Help to Buy is available in England from house builders registered to offer the scheme. Help to Buy will run from April 1st 2013 until March 31st 2016 (or earlier if all of the funding is taken up).

This guide provides an overview of the product. If you’d like to know more, or if you want to apply, please contact your Local Home Buy Agent (details at the end of this page).

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Check that these mortgages will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.

Full information can be downloaded using the following link:

Questions and answers

Q Can I buy a home off plan?

Yes, you are able to reserve a new home off plan at any time. However, you cannot exchange contracts before three months to legal completion of the sale. You also need to ensure that your mortgage offer is valid through to legal completion.

Q Will I have to pay Stamp Duty?

The Government’s standard rules and procedures for Stamp Duty Land Tax (SDLT) apply to all Help to Buy purchases.

SDLT is payable at the time of purchase, on the full purchase price of the home. That is, the amount paid by you (the first mortgage and any cash contribution) plus the value of the Help to Buy assistance.

There is no further SDLT to pay on any ‘staircasing’ repayments or repayment when the home is sold.

You should budget for SDLT on the full open market price of the property when you purchase a Help to Buy home.

Q Who pays for repairs and ongoing maintenance to my home?

It is your responsibility to repair and maintain your home. New homes often come with a guarantee that will cover certain defects for up to 10 years after it was built. This guarantee usually only covers defects in the house builder’s workmanship. Your solicitor/conveyancer will be able to advise in more detail on this.

Q Who provides the contribution for Help to Buy?

The equity loan is provided by the Homes and Communities Agency and administrated by your local Home Buy agent.The contribution is secured by a second charge on your property title registered at Land Registry.

Q How long will it take before I can move in?

Because Help to Buy homes are generally on new developments (and may still be under construction), in common with most new home sales, you will normally be expected to arrange a mortgage and exchange contracts within one month of paying your reservation fee.

Your moving in date may dependon the time required to complete construction work, which will vary from scheme to scheme. Some Help to Buy applicants may need to wait for a longer period of time for a home that matches very specific needs whereas others may buy from a development that allows earlier occupation.

Q What happens if the completion of my home is delayed?

Once you have committed to buy a home (at exchange of contracts) the house builder will have agreed to build the home and keep you informed of progress.

If you are unhappy about any delays in construction you must speak to the house builder. Your solicitor/conveyancer will be able to advise on the house builder’s contractual responsibilities before you agree to the sale.

You should check with your house builder that the funding will be available on the date you expect to complete your purchase.

Q Are there any restrictions on the properties that I can purchase?

All Help to Buy homes are on new build developments where the Agency has a registration agreement with the house builder. You can only purchase from these house builders. The maximum purchase price is £600,000.

Q Can I sublet my Help toBuy home?

No. Help to Buy is designed to assist you to move on to or up the housing ladder. If you wish to sublet, you will first have to repay the Help to Buy equity loan assistance. In exceptional circumstances (e.g. a serving member of the Armed Forces staff whose tour of duty requires them to serve away from the area in which they live for a fixed period, then sub-letting can be considered. In these circumstances you would also require approval from your mortgage lender).

Q Can I own other homes and buy a Help to Buy home?

No. Help to Buy is designed to assist you to move up the housing ladder and must be your only residence. This means you will be expected to sell your current home if moving up the ladder.The disposal of your current home will be verified by your solicitor/conveyance before you can proceed to exchange contracts on the Help to Buy Home.

Q Can I own a Help to Buyhome and buy a second home?

No. Help to Buy is designed to assist you to move up the housing ladder. If you can afford to purchase another home you will have to repay the Help to Buy equity loan.

The property purchased must be your only residence. Help to Buy is not available to assist buy-to-let investors or those who will own any property other than their Help to Buy property after completing their purchase.

You cannot rent out your existing home and buy a second home through Help to Buy.

Applicants who make fraudulent claims for Help to Buy assistance will be liable to criminal prosecution.

Fraudulent claims will always require immediate repayment of the equity loan assistance.

Q Can I use cash from my council, Housing Association or other public sector body to buy with the addition of help through Help to Buy?

Provided that your local council is satisfied that this represents value-for-money and the other funding is compatible with Help to Buy. Funding provided which must be secured against your home would not be compatible with the Help to Buy scheme.

Q After purchasing my home, can I increase my mortgage or take out another loan?

Not without permission from the Post Sales Home Buy Agent. Further advances must be approved by the Post Sales Home Buy Agent.

Advances to be used for staircasing or repaying the equity loans will usually be welcomed and approved. Advances for other purposes will be considered by the Post Sales Home Buy Agent on a case by case basis (see question below regarding extending or altering the property).

You can transfer your mortgage to another qualifying lending institution following prior permission from the Post Sales Home Buy Agent. However, you must ensure your new lender is informed that your home is a Help to Buy property with a second charge entitling the Agency to a share of the future sale proceeds.

The Post Sales Home Buy Agent may decline permission for further advances or transfer to another lender if after assessment they consider you may be putting yourself in an unsustainable financial position.

Q Can I extend or alter the property?

Not without permission. Because Help to Buy is designed to help people move up the housing ladder, you should consider repaying part or all of the Agency’s contribution before making plans for improvements or alterations. This is because the Agency is seeking to help future aspiring buyers and may use the proceeds of these repayments to make more assistance available. Therefore, consent will not usually be granted for significant home improvements. The Post Sales Home Buy Agent will act reasonably in considering any application and will review cases of hardship if, for example, property modifications are required for a disability.

When your property is sold in the future, if improvements have been made with the approval of the Post Sales Home Buy Agent, these will be ignored when your property is valued to work out how much should be repaid to the Agency.

Q After five years of ownership how is the fee collected?

Fees can be paid in a single yearly payment or in monthly instalments.

The Post Sales Home Buy Agent will collect your fee by direct debit or standing order. They will contact you at least a month before your fees are due, to set up your repayment arrangement.

You will also receive a statement each year confirming when your fees are payable. The annual statement will also show any payments you have made once you start paying the fee.

Q What if I die after purchasing a Help to Buy home?

This depends on whether you bought your home alone or with others.

If you bought the house/flat on your own and you die, the home will be passed on in the normal way under the terms of your will and the payments explained in this guide will be made by your estate in accordance with the scheme. If you have not made a will it will pass under the laws of intestacy.

It is recommended that a sole buyer seeks independent legal advice about this.

If you bought your home with others and one of them dies, their interest in the property will either be transferred to the surviving co owner (s) or will pass under the terms of their will, or (if there is no will) the laws of intestacy.

It is recommended where there are two or more owners, that they seek independent legal advice about this.

Q Can owner names be added or changed on the Help to Buy property?

Only with permission from the Post Sales Home Buy Agent and you will be required to cover their administration costs. This will require a deed of accession and/or a deed of release to be completed by you. This is a legal document that permits name changes on the property.

Q Can I get help with benefits to pay the Help to Buy fees if, for example, I lose my job?

Because Help to Buy fees arenot classified as rent, they do not qualify for Housing Benefit. You should make sure you have made arrangements to ensure you can continue to make you Help to Buy payments if your income falls. You should seek independent financial advice about this before purchasing a Help to Buy home.

Q What happens if my partner moves out and no longer wants to be party to the equity loan agreement?

The Post Sales Home Buy Agent will be able to arrange for a‘Deed of Release’ which will release your partner from the obligation of havingto repay the equity loan. Assuming that your first charge mortgage lender is content for this to take place and that you are able to provide evidence thatyou can meet your housing costs and still have a reasonable standard of living, permission should be a formality.

Your Local Home Buy Agent for Help to Buy homes in the Derbyshire area is:

Orbit Group 03458 50 20 50 select option 2