The Help to Buy Scheme: The Ins and Outs

It’ll be something you’ve seen plastered all over the news, the new government ‘help to buy’ scheme (Scotland). But exactly, what is it, and how does it work?

Since the collapse of the economy in 2007, the housing market has been a huge casualty, with the numbers of homes being sold falling drastically nationwide.

This led to mortgage lenders ceasing to dish out 100% mortgages – which some believe were madness anyway.

And the stagnation of the housing market hurt no one more so than first time buyers. Those already on the property ladder, had their current home as an asset to help raise funds for a deposit, a luxury first-time buyers didn’t have.

But now, as things seem to be beginning to pick up, the government has introduced the ‘help to buy’ initiative.

Created to help first time buyers get that all important first step onto the property ladder, it allows those in the market for their first home to apply for a 75% mortgage, while the scheme covers a further 20%, leaving only a 5% deposit needed.

Over the last few days, mortgage lenders, including RBS and the Halifax, have unveiled the interest rates they’ll have on offer, allowing would-be buyers to see where the best deals are.

But there’s more to this scheme than selling homes. The Prime Minister, David Cameron, has came out and said that he hopes to create more demand than there is supply, to encourage builders to begin building more homes again.

It’s not yet known how successful the scheme will be. Despite many championing it, there are some with reservations, who still believe first-time buyers may be priced out the market, once you add on the likes of legal fees etc.

There are also some who fear this could form another housing bubble, which inevitably, like all bubbles, will eventually burst.

With this said, the launch of the scheme has generated a lot of interest which is hoped will lead to people taking that all important step to buying a home.

But with house prices slowly increasing again, it’s maybe a case of the sooner you take the plunge, the better.

What do you think of the ‘help to buy’ scheme? Do you think it’ll work? We’d love to hear your opinion on it.

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