The Help to Buy scheme is a government initiative designed to assist first-time homebuyers and existing homeowners in purchasing a new-build property. The scheme launched in 2013 aiming to make homeownership more widely accessible by lowering the financial barriers which prevent many from getting onto the property ladder.
Primarily, the Help to Buy scheme benefits first-time buyers, offering them a more manageable way to purchase their first home as the average age of first time home owners is increasing. Existing homeowners looking to move up the property ladder can also take advantage of the scheme, provided they are purchasing a new-build property. The initiative is particularly beneficial for those who struggle to save for a large deposit, as it reduces the upfront financial requirements and helps them secure a mortgage with a lower deposit.
The Help to Buy scheme offers an equity loan to buyers purchasing a new-build home. The government lends up to 20% of the property's value (or up to 40% in London) interest-free for the first five years.
Buyers will only need a 5% deposit, the remaining amount will then be covered by a standard mortgage lender. For example. If you were purchasing a home worth £300,000, you would need a £15,000 deposit, a £60,000 government loan, and a £225,000 mortgage.
After the initial 5 years, the loan will build interest which starts at 1.75% and increases annually in line with inflation +2%.
The loan must be repaid in full when the property is sold or at the end of the mortgage term, whichever comes first. Repayments are based on the property's market value at the time of repayment, meaning if the property's value increases, so does the amount you owe on the loan.
While the Help to Buy scheme offers significant advantages, it also has several limitations:
The Help to Buy scheme is a valuable tool for first-time buyers especially who are looking to build a new build property giving more people a chance to join the property market with lower deposit requirements. There are certain limitations to the scheme which should be carefully considered before agreeing. If you are trying to save for your first house, then applying for a lifetime ISA may also be beneficial to save up enough money at a quicker rate.
Labour are going full steam ahead with their planning for 1.5million more houses to be built before the next election. The plan feeds into their aim for growth in Britain and kickstarting the economy with more people able to get onto the property market, more jobs for those involved in the process of building houses and an emphasis on affordable property.
The housing crisis in the UK means that too many people in the country are unable to truly afford somewhere to live and have no access to safe shelter.
The crisis is that there are around 145,800 children in homelessness accommodation.
As inflation rose and the cost of living crisis spread it meant more and more people were unable to afford a safe, decent living situation and this carried across to the housing market where house prices rose, rent prices rose along with bills and general living costs.
Now, the housing market sees a limited supply of houses for a large demand of first time buyers trying to get onto the property ladder. With mortgage rates still high at 5.25% this still leaves many people unable to buy a house and many looking for cheaper ones which are limited.
The government hopes that with 1.5 million new homes this will increase the supply of property including affordable options for those trying to get onto the property market. Currently first time buyers are feeling defeated by the market will mortgage rates so high it makes getting a mortgage and affording a deposit almost impossible for many.
There are not enough houses to fill the demand so 1.5m houses will hopefully rectify that. Labour are trying to solve the housing crisis with their housing reforms.
Planning permissions become complicated due to ‘green belt’ land areas which limits the expansion of towns and cities.
In 2023 there was 13% of land area in England which was restricted from having any building on it.
Labour will be enforcing a new category of ‘grey belt’ land which will comprise of lower quality land nearby existing developments, roads, petrol stations and car parks. With the aim of creating more affordable housing
Local authorities will be given mandatory targets for building with the aim for 370,000 new homes a year.
With new home owners comes more people paying into the economy as they pay off their mortgage, increase spending in various retail stores to decorate, more household bills being paid and more. The economy will benefit from extra spending in these areas.
With more homes being built and an emphasis on affordability this could also mean that those homes built on better quality land and in nicer areas could then increase in value.
Zoopla report that 195m homes have increases in value by over 1% in the first half of 2024 with an average of £2,400 more.
House prices are expected to rise by 1.5% by the end of 2024.
The mortgage rate also factors in as with more homes being built, more people will be deciding to take out a mortgage which in turn supports lenders. Could this help with the decision for the Bank of England to lower rates? This would support more people being able to afford a house in 2024, we will find out today if the bank of England will be lowering the mortgage rates. The Bank of England has officially lowered their rates to 5%. This is a critical moment for the UK economy.
So, building 1.5m more houses will provide more affordable housing options to those who have a smaller budget and especially for first time buyers. However, there is the risk that a greater divide on prices will emerge making current, sought after homes and areas become essentially, premier listings with higher prices.
Living without roommates or a partner is becoming more popular despite the high costs of living making this more difficult.
Within the last year the amount of people living alone has risen from 178,000 to 237,000.
When trying to become a solo homeowner it is also worth taking a look at the mortgage-to-salary ratio in your area so you know whether you can afford the repayments there.
Alan Boswell Group have compared the cost of living alone to the square footage of a 1 bed flat, studios and single room occupancies to determine the cheapest and most expensive areas of the UK to live alone.
The cheapest places to live alone are in the North of England or in the midlands with an exception of Plymouth which sits at NO. 9 on the Alan Boswell list with the price per square meter at £11.77.
Price per square meter is £8.85 making it the cheapest place to live as a single occupant.
Price per square meter is £9.17.
Price per square meter is £9.22
Price per square meter is £9.91.
Cities in the South of England are the most expensive to live alone with an average price per square meter of, £18.09 which is a 76.95% increase from the North which is, £10.22 per square meter.
Price per square meter is £23.39.
Price per square meter is £19.33.
Price per square meter is £19.32.
Price per square meter is £17.40.
Living alone will always be a more expensive option than sharing the cost of rent and household bill with a partner or roommate.
The average monthly costs of living alone are reported at £651 excluding the costs of rent. These costs include, council tax, household bills, groceries, phone bills and more.
Those who live alone are spending on average 92% of their disposable income on living expenses compared to 83% for couples.
Living alone also means spending on average, £15 more on grocery shops per week.
This explains the data that 47% of young singles have no savings at all.
There are a few ways in which you can reduce your spending including, lowering your energy bills through useful tips to lower your energy usage or installing a smart meter.
If you are on a low income then learn a few ways you can still budget and use you money efficiently to stay afloat.
Setting yourself a budget which prioritises rent and bills to help you keep track of your money. This can be done by using finance apps.
Don’t be defeated by high living costs and a low budget, learn ways to make your money work for you.
When it comes to hard money loans, you might wonder if there are differences between commercial and residential projects. In truth, they differ in several ways, particularly in terms of collateral, loan-to-value ratios, and interest rates.
Understanding these differences can help you choose the right loan for your project. John Pribble, CEO of DFW Hardmoney said: “Whether it's a commercial or residential project we offer distinct plans tailored to suit your needs”.
You should be prepared to navigate these financing options. Making informed decisions can significantly impact the success of your project. Always remember, that the quality of your real estate investment often dictates the terms of your hard money loan.
A hard money loan uses real estate as collateral for quick cash. Typically, it is not from a bank but from a private entity.
When choosing a lender, consider their rates, options, and customer service. Always aim for a good lending experience.
Hard money loans are preferred as an alternative funding source, primarily by real estate investors, developers, and flippers.
They originate from non-traditional lenders, the primary reason behind them being termed as 'last resort' or interim loans.
These loans offer rapid capital acquisition but at a higher expense, making them unique compared to traditional financial institutions.
Mechanisms Applications
Used in real estate transactions Favored by property flippers
Sourced from non-bank entities Rapid approval process within ten business days
Emphasizes collateral over financial status Suitable for short-term real estate investments
Negotiable terms between lender & borrower Funds range from six to 18 months
Selecting a hard-money lender requires careful evaluations of factors like interest rates, loan options, accessibility, and quality of customer service.
Hard money loans are unique forms of lending used mostly in real estate transactions. It's a favourite option for investors and those with equity in properties.
These loans don't follow the traditional route. Private lenders or investment groups issue them instead of commercial banks. The approval depends more on the equity in the property than on your credit history.
The key characteristics of hard money loans include being short-term loans that typically last several months to a few years.
You're primarily granted approval for these loans based on the equity in your property, which is used as collateral.
Your credit history isn't a significant deciding factor. Moreover, these loans often have higher fees and interest rates compared to standard commercial loans.
Yes, there are. For one, hard money loans are subject to financing contingency, while all-cash offers are not.
An appraisal is usually required for hard money loans but not for all-cash deals. Furthermore, hard money loans tend to be more expensive due to higher interest rates and fees.
Your interest rates on hard money loans may vary. This depends on numerous factors, like your credit history. An experienced borrower may receive lower rates.
Having a strong relationship with your lender can help. This bond could influence your interest rate positively. However, adding this factor could also add complexity to the process.
Besides interest rates, lenders also charge points. You might be required to pay these upfront or appended to your loan balance.
Evaluating these factors helps you make decisions. Your knowledge of hard money loans will be enhanced. Better understanding leads to a rich user experience.
Obtaining reliable and concise resources is crucial. This aids in enhancing efficiency while checking their options. A well-informed decision provides tailored solutions to user needs.
Hard money lenders, essentially, provide funds for short-term real estate investments. They differ from other banking companies in your journey.
Your loan approval happens faster with a hard money lender compared to traditional banks.
Making your real estate purchase or renovation achievable is their primary role in providing these loans.
Hard money loans can be a feasible financing solution. The type that suits you best - commercial or residential - depends on your specific needs.
Residential hard money loans are often used when traditional mortgage lenders won't provide financing. This happens typically due to issues with the borrower's credit history.
On the other hand, commercial hard money loans can be a lifeline for businesses. Especially for those desiring to acquire properties quickly without meeting traditional lending criteria.
Critical differences lie in the purpose of each loan and whom they serve. They have unique terms and requirements adjusting to individual business or homeowner needs.
If you're exploring hard money lenders, a reputable source to check is Forbes' list, which includes trusted institutions such as Easy Street Capital and RCN Capital.
Your choice of lender matters as much as comparing rates. The one with a lower rate may not always be ideal.
Last but not least, remember the importance of a clearly defined exit strategy in repaying your loan.
Your assets, like specialized equipment or industry-specific inventories, might be challenging to sell.
These assets could present problems if your business requires swift funds or if you aim to diversify your collateral.
Asset-based lending can provide access to capital but typically has higher interest rates and costs than conventional bank loans.
This is due to the increased risk for the lender as their focus is more on your collateral than your credibility.
Loan brokers can help by choosing the right lender for you based on your assets.
They prioritize accounts receivables as primary collateral, followed by commercial real estate, equipment, and inventory.
Hard money loans provide immediate cash but usually have high interest rates, short terms, and sizable origination fees.
This makes them unsuitable for those needing long-term funds or applying the loans towards low-margin or long-horizon business endeavors.
Bridge loans are short-term financing commonly used in real estate transactions and can be an alternative to hard money loans.
The existing property's value forms the base for purchasing a new building.
Property improvement loans permit property owners to finance maintenance and upgrades using the future value of the property.
This kind of loan could result in a higher resale price or better rental prices.
Hard money loans typically carry higher interest rates because the decision is based on collateral, not your credibility.
There's also a significant foreclosure risk associated with these loans.
In comparing commercial and residential projects, you'll find notable differences with hard money loans. Your choice should depend on your unique project needs.
Commercial loans often have higher interest rates and stricter terms, while residential loans are usually more flexible. Ensure you understand these distinctions to make informed decisions.
For insights into future financial trends, familiarize yourself with funding in the retail sector. This could help guide your project's financing strategies.
With the elections result naming Labour as the winners we now wait for the action they promised to be delivered.
Labour promises for home owners and renters will be watched to see which ones come through to help those getting onto the property market.
This promise also included the building of affordable and council housing helping those on lower incomes also get onto the property market.
Now Labour are in parliament we wait to see when and if their promises and followed through to see what a labour government means for the housing market.
We know first time buyers are fighting against the cost of living to try to get on to the property market and own their first home. This is causing the age of first time buyers to increase with the average age now being 33-34 across the UK.
Uswitch have recorded data surrounding first time buyers so we can stay up to date on trends and patterns in the housing market.
Are any of these surprising to you?
When you are going to view a house it's important to go with questions in mind so you get all the information you can. This is a big decision so make sure you get both sides.
The real estate agent may not give you the whole truth about everything, they are trying to sell it after all but asking the questions could still give you details you didn't know before.
Researching the property and the area before or after the viewing is also a huge factor that should go towards your decision.
With buying a home and owning your own property becoming an almost impossible task for first time buyers due to the cost of living and high mortgage rates, many people are forced to continue renting properties instead. This is causing the age for people to own their own home to increase each year.
This has caused the demand for rental properties to double since pre-pandemic levels however, the supply remains at 28% below pre-pandemic level. The race to rent is intense across the country as properties don’t stay on the market for long.
Zoopla report that the average rent prices across the UK is at £1223 which is +7.8% from the last year. Despite the increase this is still the lowest level of rent rises seen in the last two years, could prices be coming down?
With London being the most expensive place to buy property is continues the theme with being the most expensive place to rent too, not surprising to anyone.
If you are looking for cheaper areas to live to help your money go further then this list is for you.
With the cheapest area being the North East of England to rent with average rental property costing £695 per month.
There are some areas of the UK which are popular among young people and professionals to rent and live which have average rental prices below £1000 a month. These include:
David Beckham has launched a prize draw to win a £5m luxury home located in East London.
The draw is part of Omaze’s biggest ever helping to raise money for London’s Air Ambulance.
The Air Ambulance Charity spends £15million a year to maintain their services providing life saving car in London. In 2023 they attended to over 2000 patients and are the only service in London able to provide these on scene interventions in the city.
David Beckham has teamed up with Omaze to support a charity he truly believes in and values.
You can enter online at Omaze before July 28 to have a chance of winning. To enter you will have to make a donation which buys you so many entries into the draw. For example, £10 will get you 15 entries and £50 will grant you 85 entries. Alternatively, you can subscribe to Omaze to double your entries.
The winner will also be given £250,000 as a cash prize to help them settle in to the house.
Those who enter before the 14th July could be in for an extra win of a Maserati GranTurismo Trofeo worth over £170,000.
The money raises will go towards the Air Ambulance charity to replace their two helicopters which are needed before September to continue their specialty care.
The house is worth over £5,000,000 and is their biggest prize to date. A four bedroom house in Victoria Park Village, Hackney with a gym and a spa.
With no stamp duty, mortgage or conveyancing fees to pay, furnishing included and a cash prize of £250,000 one lucky winner will be able to move straight in, rent the property out or sell it on.
This luxury property will have you living a brand new life with access to your own jacuzzi and sauna, games room and gym under your own roof. A light and spacious property offering everything you dreamed of.
Would you enter into this draw for the chance of winning?
We know that the property market is incredibly difficult to get on to with higher mortgage rates and struggling to save enough for high deposits. The age for first time home buyers is increasing and people are having to wait longer and spend longer saving and scraping before they can afford to buy their own house.
Due to the cost of living not only are mortgage rates harder to aim for, utilities, food and other living costs make it hard for first time buyers to save enough to move with 53% of renters citing 'affordability' as the main reason for them not planning to buy a house in the next 5 years.
Is there a lack of hope?
Mojo Mortgages has revealed that the average age does also vary depending on the region but the national average for first time home owners is now 33. The region can make a significant difference with location being a large factor in the price of a home. London will always be the most expensive place to live with high demand and not enough supply.
Since 2011 the average age has increased by 3 years showing just how much the prices for mortgages and deposits has risen.
When you buy a residential property such as a new home you will have to pay stamp duty, a tax to transfer the ownership of the property. Stamp duty is another part of buying a house you need to be aware of and make sure you know how much you have to pay.
How much stamp duty tax you pay is dependent on the price of the property. Any property under £250,000 is exempt from paying any stamp duty.
Property worth £250,001 - £925,000 there will be a 5% stamp duty charge.
Properties worth £925,000 - £5.1m will have a 10% stamp duty charge.
Those over £1.5m will have a 12% stamp duty charge.
For first time buyers the threshold is £425,000 before having to pay any Stamp Duty, which the conservative party have pledged to maintain If they will the 2024 election.
Stamp duty is a tax which pays for the transfer of ownership of a property and is paid to HM Revenue and customs. You can pay this yourself by submitting a return form or it could be included in your solicitor fees if so, they will do this for you. If you do not pay or you don’t submit your form on time (within 14 days) then you will have to pay penalties with interest.
Stamp duty is tax which goes to the government to be included in their budget which covers sectors such as, transport, roads, police, health and the emergency services.
Today, the Conservative party have announced their manifesto with Rishi Sunak stating their pledges for their time in parliament if they are voted in on July 4th.
The Conservative manifesto lay priority on cutting taxes, improving investment which continues their economic trend of using trickle-down economics, in which cutting businesses and income taxes could see results in a greater economy for the UK.
