Help to Buy: What You Need To Know

House prices rising, symbolized by arrows with a house shape going up.

 

Sadly, it’s a well-known fact that in the current economic climate buying a house, especially if you’re a first time buyer, is a notoriously tricky business. However, if you’re struggling to save up for that mammoth deposit on top of the cost of living, there are avenues you can pursue in order to get your foot on the ladder. The Help to Buy home ownership scheme gives you financial help if you live in England and can’t afford to buy a home.

The Help to Buy equity loan

This loan is available to first time buyers, and home movers on new build homes up to the worth of £600,000. Be aware that you won’t be able to sub-let your home if you use this scheme. With a help to Buy equity loan you will have to contribute at least 5% of the property price as a deposit, the government will then give you a loan of up to 20% of the property’s price, you will then need a mortgage to cover the remaining 75% of the property’s worth.

The benefit to getting an equity loan from the government is that with a larger amount of money to put down, you’ll hopefully get a better mortgage rate from your particular lender.

So, what happens when you have to pay the equity loan back?

Thankfully, the equity loan is interest free for the first five years. However, from the sixth year, and every consequent year there after you have to pay an admin fee. This fee will begin at 1.75% of your loan, and increase every year by any increase in the Retail Prices Index plus and extra 1%.

A word of warning, these repayments are in addition to your mortgage repayments, and won’t be decreasing in size. So, over time the cost of the admin fee could become pretty expensive.

The equity loan will need to be repaid in full after 25 years, when your mortgage term finishes or when you sell your home – whichever happens first. You will repay the market value of the loan at the time, rather than a fixed cash amount. For example:

You take a 20% equity loan to buy a property worth £200,000, which will be £40,000. Then, when you sell the property, it’s worth £250,000. You will consequently have to repay £50,000 – this is 20% of the new value of your home, not the amount you borrowed. If the property had dropped in value, you’d pay less than you borrowed.

You can also choose to repay part of the loan early in chunks of either 10% or 20% of the total value.

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Top 5 Tips for Packing When Moving House

It’s a well-known fact that moving house is up there as one of the most stressful situations an individual will ever go through. What’s more, it’s more than likely that the meteoric rise in stress levels will begin to take place months before the removal van pulls up outside. Living somewhere for years and years will, inevitably, result in an astounding accumulation of possessions, and it is commonly the thought of having to segregate and pack all those worldly belongings that sees the majority of us break out in a cold sweat. So, in order to prevent you from falling at the first hurdle follow these top 5 packing tips to make your move, relatively, stress free.

1)     Be selective

By this we mean that now is the perfect time to have that clear out you have been meaning to do for months, maybe even years. There will inevitably be a lot of junk hiding amongst your treasures so hiring a skip could be money well spent. You may also find that you have some perfectly good possessions that you just don’t need or want anymore, but other people will. If this is the case take a trip to the charity shop or attend a car boot sale – this way you manage to lighten the packing load and earn some money or help someone less fortunate out at the same time.

2)     Be strategic

Packing up the entire contents of a house can be a daunting, and sometimes overwhelming, thought. In order to stay on top of things pack each room one at a time. This way you set yourself more achievable challenges, and once a room is all packed and ready to go you will have the relief of knowing you are one step closer to your end goal.

3)     Be organised

It’s stressful enough moving as it is without adding extra niggles which could of easily been avoided with a bit of forward thinking. Make sure you order plenty of boxes way ahead of time, so when it does come round to packing it is all there waiting for you – and you won’t have the hassle of not having enough storage.  Ensure that the boxes you do order are strong, and designed for the job at hand, otherwise there could be a few nasty accidents.

4)     Be sure to label everything

There is nothing worse when you move home than looking for the essentials such as clothes or kitchen utensils to find you have no clue where they are. Be sure to label each box with exactly what’s in there to minimise stress, and make unpacking that little bit easier.

5)     Be practical

In a haze of industrial tape and cardboard boxes it may be quite easy to lose your head, but adopting a practical approach can save a lot of drama and hiccups along the way. Remember to pack important documents, as well as necessities you may need to access quickly, clearly labelled and separately from your other items. Pack fragile items on their own and with plenty of padding to avoid breakages, tears, and lots of cleaning up. Also, as tempting as it may be to save room, don’t over pack your boxes. This will minimise injuries and the chance of the boxes splitting; revealing all your worldly goods to your new neighbours.