Aspiring homeowners thrown a lifeline as Government extends the Help to Buy build deadline beyond December
- New builds will now have to be finished by February to be eligible for the scheme
- This pushes the deadline back by two months, giving house builders more time
- The move comes as coronavirus hampers construction delivery times
First-time buyers whose purchases were delayed by coronavirus have been thrown a lifeline following a Government decision to extend the Help to Buy scheme.
While Help to Buy in its current form will still end in March next year, house builders will now have an extra two months to finish building properties eligible for the scheme.
This will come as good news to first-time buyers, who have suffered a double blow with delays to new home completions and vastly reduced mortgage options as lenders pulled low deposit deals.
House builders will now have an extra two months to finish building Help to Buy properties
Help to Buy is still set to begin a planned phase out from March 2021 which will limit the scheme to first-time buyers only and place regional caps on the value of eligible homes.
Home builders will now have until 28 February to finish building homes. Most homebuyers must complete buying their home by 31 March 2021.
The Government said that some homebuyers will be given more time to buy and move into their homes if they reserved it by 30 June, but must have experienced severe delays to purchasing due to coronavirus to qualify.
Alex Rose, director of new homes at Zoopla, said: 'Demand for Help to Buy properties is unwavering, so this news is a temporary relief for housebuilders and agents alike, but most importantly to those thousands of buyers whose Help to Buy purchase might otherwise have been jeopardised.'
But he added: 'Whilst today's news shores up the purchasing plans for some buyers, many of whom are likely to be second steppers, it is uncertain how many will still miss out on this extended deadline.'
Currently the controversial Government scheme offers both first-time buyers and home movers an equity loan of up to 20 per cent, or 40 per cent in London, to help them buy a new build property.
This means that buyers must put in a 5 per cent deposit, to secure a 75 per cent loan-to-value mortgage, with the equity loan making up the rest.
In London, buyers can put in a 5 per cent deposit and secure a 55 per cent loan-to-value mortgage.
The scheme is designed to make buying more affordable as the lower the loan-to-value, the lower sum borrowed and the mortgage rates, and therefore monthly repayments should also be lower.
The catch is that after five years, you must start paying interest on the loan.
Because it's an equity loan, the government will also own a share of any rise in the value of your property. This means the loan grows as your property grows in value.
If the property value drops however, the size of the loan will drop with it.
Critics of the scheme argue it has inflated house prices – meaning home buyers are saddled with bigger mortgages for longer.
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