Help to Buy London is just one of many government supported schemes to help individuals trying to get their first foot on the property ladder in 2016.
Mark Hayward, managing director of the National Association of Estate Agents (NAEA), says an alternative to Help to Buy London is the shared ownership scheme available through housing associations.
Shared ownership schemes are where a homebuyer purchases a share of the property - 25 per cent to 75 per cent of the home’s value - and pays rent on the remaining share.
A mortgage will need to be taken to pay for the homebuyer’s share of the purchase price.
Simon Checkley, managing director of mortgage broker Private Finance, says the chancellor’s recent decision to offer a discount on shared ownership homes by as much as 20 per cent to buyers aged more than 40-years-old is further evidence of his intention to adapt the scheme to where it is needed most.
Mr Checkley says older borrowers will now have even more support and even further incentive to refinance or buy their own homes before approaching their retirement years.
Those some way off the savings needed to purchase a property this year might be better off taking advantage of the separate Help to Buy Isa Andrew BridgesThe extension of the Right to Buy scheme, which provides the opportunity for people already living in a housing association property to buy their home, should also be explored by advisers.
Separately, the NAEA’s Mr Hayward says advisers looking at options for those trying to get their first foot on the property ladder should be aware of the fact the government has pledged to build new starter homes for first-time buyers which will be offered at a 20 per cent discount.
Andrew Bridges, managing director of estate agent Stirling Ackroyd, says those some way off the savings needed to purchase a property this year might be better off taking advantage of the separate Help to Buy Isa, which could prove extremely helpful in boosting savings.
The Help to Buy Isa launched at the end of last year and is where the government will top up savings.
Buyers can save up to £200 a month into a Help to Buy Isa.
When they are ready to buy a property, the government will add a 25 per cent contribution to your Isa to a maximum of £3,000.
The NAEA’s Mr Hayward says the reality with the Help to Buy Isa is the more you save of your own money, the better the mortgage deal you will be able to get.
To learn more about the Help to Buy Isa, and earn CPD, click here to read FTAdviser’s Guide to Help to Buy Isas.
In terms of when is best to step on the property ladder, as mortgage rates are still very competitive and property prices continue to increase, Simon Checkley, managing director of mortgage broker Private Finance, says it makes sense for prospective homebuyers to try to buy a home of their own as soon as they possibly can.
However, as interest rates are likely to increase at some point in the next 12 months, Mr Checkley says clients need to insure themselves against unmanageable increases to their monthly mortgage payments.
Mr Checkley says: “If circumstances permit, we are therefore encouraging clients to take competitively priced five-year fixed rate deals sooner rather than later; even with a higher loan-to-value on their property to avoid being caught out later on.”
