Frazer Fearnhead, CEO and co-founder of peer-to-peer lending property platform The House Crowd, talks to HomeFocus about Help to Buy…
What are the benefits of the Help to Buy market for buyers?
To buy a property, you need to have enough money saved to put down a deposit. The problem with this is that many people simply can’t afford the deposit outright. This is especially true for first-time homeowners who want to get a foot on the property ladder, but just don’t have the means. People moving to a new house also feel the pinch when trying to take a step up to a larger or more expensive property. Help to Buy increases affordability for both groups of buyers by setting the deposit at 5% – much lower than a typical mortgage option.
What types of property they can buy?
Help to Buy focuses on helping families buy properties such as flats and houses. To help first-time buyers and home movers secure their dream home, the scheme offers an equity loan and a mortgage guarantee. The equity loan part is restricted to new-build properties. Buyers will only need to raise 5% of the property value for the deposit. The Government will contribute a further loan of 20% that is interest free for the first five years. With a combined deposit of up to 25%, buyers can access better mortgage rates from lenders participating in the Help to Buy scheme.
The mortgage guarantee applies to old and new homes valued at £600,000 max. Again, buyers will only need to raise 5% of the property value for the deposit. The Government will then step in and provide a guarantee for a further 15% directly to the mortgage lender.
What are the areas in which properties are available to buy using Help to Buy?
It’s only available in England – although Scotland, Wales and Northern Ireland have similar schemes. Help to Buy properties are available all over the country. However, as cities like Manchester and commuter areas like Altrincham become more popular, the trend is moving increasingly North West.
Most of House Crowd Developments’ properties are Help to Buy and they are proving very popular. In fact, 40% of the houses in our latest development in Cheshire sold on the opening day!
How is Help to Buy shaping the property market?
Help to Buy encourages young people to own property instead of renting – and empowers them with the means to do so. This in turn helps developers build and sell much-needed properties to support the growth of our cities and wider economy.
For more information, see thehousecrowd.com.
Two of the current Help to Buy developments being crowdfunded by The House Crowd are:
BUCKTON VIEW, MOSSLEY
Well situated at the top of Micklehurst Road with views over to Buckton Castle, Buckton View comprises 36 houses finished in attractive local stone, in a low-density development. Featuring lots of open space, it is and ideal environment for children to play safely away from traffic. First time buyers can choose from four different house types, ranging from a charming terrace to a spacious 4 bed detached house. The Help to Buy scheme is available which means buyers only need to find a 5% deposit.
PARKSIDE, CONGLETON ROAD, SANDBACH
A development of 14 attractive houses in the pretty, historic Cheshire market town of Sandbach. There is a mix of two and three bedroom properties adjacent to parkland and just five minutes’ walk to the town centre. With high quality contemporary fixtures and fittings Parkside promises to be a very popular development. For those loving the outdoors lifestyle Parkside is on the doorstep of the rolling Cheshire Plain and the Welsh mountains and countryside. Sandbach has excellent transport links to the North West’s motorway networks and the development is ideally located for quality schools. The Help to Buy scheme is available which means buyers only need to find a 5% deposit.