Last Remaining Apartments We have just four apartments remaining at our Muirton Living development in Perth. Priced at £105,000 this would make an excellent starter property – and by using Help to Buy or the First Home Fund an apartment could be yours with read more
Category: Muirton Living
First Home Fund
Finance secretary Kate Forbes has announced that an extra £50 million will be added to the First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to purchase a property. The Government says that this move will support an estimated 2,000 first time buyers and increase the total funding to £200 million.
The Government will also be investing £100 million in targeted employment support and training – with further details to be announced.
The First Home Fund is a Government initiative to help first-time home buyers purchase a property. Up to £25,000 is available to all first-time buyers towards the purchase of both new build and existing properties.
In order to qualify for the scheme, you will be required to provide a minimum deposit of 5% of the purchase price (subject to individual lender requirements) and your mortgage must be at least 25% of the purchase price. Although the Government will have an equity share in the property, you will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.
You will normally repay the Scottish Government’s percentage equity share when you sell your home.
The scheme is open to first-time buyers who are taking out a mortgage. You cannot apply if you are a cash buyer or if you have previously owned a property in the UK or abroad at any time (as either a sole or a joint owner).
The maximum contribution from the Government is £25,000 or 49% of the property valuation figure or the purchase price (whichever is lower). If you purchase a property for less than the valuation figure, the maximum Scottish Government contribution is £25,000 or 49% of the purchase price.
A Date for the Diary – New Homes Week!
New Homes Week Unlocked is an incredible resource where beautiful new homes available from around the UK are being showcased along with expert guidance on how to take advantage of the fantastic initiatives available.
It takes place from July 20th and will give you the chance to find out more about the massive benefits that buying a new build home, compared to a second-hand home, gives you. New Homes Week Unlocked will support people to press ahead with the plans they have had to put on hold over the last few months.
Due to the Covid-19 crisis things will be a little different after it was postponed from May.
Interior designer Sophie Robinson will be sharing style tips, exploring show homes and providing information and advice on the new process of safely viewing show homes while social distancing.
Why buy a new home?
From superb finishing touches, quality specifications and fantastic deals available including a 10-year warranty as standard, buying a new home provides complete peace of mind. In addition, you can use the hugely popular Help to Buy equity loan scheme and the new Help to Buy ISA to help you buy your dream home and finally either stop renting or moving out of your family home.
So explore the many great reasons why you should buy a new build home from July 20th!
Surge in Demand for New Build Homes
Home buyers with low deposits are increasingly turning towards Help to Buy after banks continue to withdraw mortgage products.
Stats released by Zoopla this week show that demand for new homes is highest in the North East, at 139% above the level of demand seen the beginning of March, whereas demand for exiting properties in this region was up by just 72.5%. This demand (measured by a combination of inquiries and browsing) for new-build homes from first time buyers is up 87% since March. Demand for new builds is 66% higher across the UK, whereas demand for existing homes is up by 46%.
Scotland recorded a 33% increase in demand, even though the market remained closed until 29th June, but we expect to see a surge in demand that will exceed England’s figures due to the affordability of good quality homes in Scotland, especially now that the market here is open and banks continue to limit access to mortgage products.
Buyers locked out of the market
This rise in demand for newly built homes is largely due to first-time buyers being locked out of the general market because lenders are withdrawing mortgage products for buyers with low deposits. These buyers are now looking at the new build market where they can purchase a home with just a 5% deposit using the Help to Buy scheme.
Mortgage providers have withdrawn these products because should house prices drop, even in the short term, this could push highly leveraged buyers into negative equity. Several lenders are offering mortgages with a minimum of 15% deposit required as opposed to the 5% deposit required before the pandemic. This change will affect first time buyers who could potentially shut out of the market for the foreseeable future.
This change disproportionately affects anyone who is trying to get onto the property ladder, and unless first-time buyers have cash reserves, they are effectively shut out of the market.
What is Help to Buy?
The Help to Buy (Scotland) scheme enables those who want to buy a property to do so with just a 5% deposit. Help to Buy (Scotland): Affordable New Build and Smaller Developers Schemes have now been extended to March 2022 with an additional £55 million provided in 2021/22. This additional funding means that the government can help another 2,000 households to buy new-build homes.
Under the scheme buyers can borrow an equity loan from the Government up to an additional 20% of the property’s value meaning they can buy with a mortgage that covers 75% of the house price.
Demand is higher in areas where property is cheaper – and during the lockdown developers have been able to continue to sell property as they were already well-adapted to using virtual viewings and CGI imagery, and reservations could still be taken. This has resulted in a greater degree of activity compared to existing homes that could not take viewings or go on the market.
If you are considering taking advantage of the Help to Buy scheme, take a look at the current availability in our Perth, Glasgow and Edinburgh developments.
New Build Values Outperform Existing Homes
Research from StripeHomes looked at price premiums, affordability, and house price growth for new build properties compared to existing homes.
For those looking to invest then sell the property on, the research looks at the appreciation in property values. In the last year, the average UK new-build property has increased by 7.3%, compared to just 1.5% for existing homes.
According to the report, new-build house price growth increased by 6-8% in every UK region over the last 12 months. Meanwhile, the market for existing property has only shown 3% growth over the last year in the top performing areas.
There are many benefits of a newly built home – not only is it a chain-free, simple purchasing process but you can move in as soon as the financials are in place. There are also incentives available for first time buyers and the Help to Buy scheme. Newly built homes are often better quality, more energy efficient and require very little maintenance for many years.
The real benefit of a new home is the appreciation of its value. Despite tough market conditions since Brexit and now the pandemic, new-build values have continued to go from strength to strength, far outperforming growth seen in the existing sector.
Glasgow has the UK’s strongest rental yield
For new-build investors looking to let their property in the near future, a recent study by Sourced Capital has shown that Glasgow currently has the highest rental yield in the UK.
Although buy-to-let rental yields on average have remained largely flat, up just 0.1% year on year, this masks some very significant regional variations. Although Glasgow has had a very marginal decline on an annual basis, the current average rental yield of 7.87% remains the strongest in the UK buy-to-let sector.
Help to Buy Extended to 2022
Yesterday the Scottish Government pledged £55 million to help property buyers get onto the market. The scheme has been extended by a year to March 2022.
The Government announced that more than 2,000 extra households would benefit from the scheme whereby buyers can access up to 15% of the cost of buying a new-build home with a purchase price of up to £200,000.
The Government share is repaid once the property is sold or when the share is bought out by the property purchaser.
The annual funding has been increased by £5 million to £55 million to finance the additional year, of which £15 million is ringfenced for homes bought from smaller developments.
Housing Minister Kevin Steward stated “A strong and growing house-building industry is vital to Scotland’s future economic prosperity – and particularly as we plan our strategic economic recovery from Covid-19. This extension will provide us with the opportunity to reassess future priorities for the market, taking account of economic conditions following the pandemic, as well as providing a helping hand to those seeking to buy their own home.
“Since 2013, the Help to Buy (Scotland) scheme has supported people with the purchase of over 17,000 new build homes and in particular supported young people aged 35 and under. Extending this scheme will help more people to buy a new-build property, particularly those who have suffered lower levels of income and have used up savings due to the impact of Covid-19 in recent months.”
Here at Urban Union Ltd. this is welcome news and we believe it will improve confidence in the market allowing young people to realise their dream of owning their own home when they may have otherwise missed out. At Urban Union we regenerate communities and build affordable, high quality homes for people at all life stages – from first time buyers through to downsizers.
What is Help to Buy (Scotland)?
Help to Buy (Scotland) is a shared equity scheme aimed at helping both first-time buyers and home movers buy a new build home.
Help to Buy (Scotland) is made of up two schemes. The Affordable New Build Scheme available to larger homebuilders and the Smaller Developers New Build Scheme for smaller home builders and is available through these participating builders.
The rules covering the two schemes the same and include:
- A deposit of at least 5% is required.
- Your combined deposit and mortgage must cover 85% of the purchase price.
- The Scottish Government will contribute the remaining 15% of the purchase price holding security over this proportion till you own your home outright.
- The mortgage must be a repayment mortgage of at least 25%. This cannot be an interest-only first mortgage.
Talk to us about our developments and available properties or find out more here.
An example of how you could use Help to Buy at Muirton Living
Prices from £105,000 with £2,500 incentives for July Reservations.
£105,000
5% client deposit of £5,250
£24,150 FHF contribution
Mortgage £75,600
£500 lender cash back
30 year term
• Fixed
• Monthly payment – £277.05
• Initial Interest rate – 1.94%
• Initial number of months on the borrowing rate – 24
• SVR payment – £380.06
• SVR rate – 3.59%
• Number of months on the SVR – 336
• APRC – this needs to be equally prominent as any other rate – 3.9%
Here in Scotland we are entering into phase 1 this week whereby some of the restrictions we have faced are to be eased. This includes meeting others who aren’t from your household, albeit in an outside setting.
For many of us, the past two months have been spent in the comfort of our own homes and away from some of the most common triggers of anxiety. We have been able to take stock, spend time with loved ones and take a step back from our usual work patterns.
With lockdown restrictions starting to tentatively lift, many of us could be feeling anxious about whether they will be able to readjust back to ‘normality’ and what their ‘new normal’ will look like.
A change in lifestyle may feel challenging and could lead to an increase in stress and anxiety. It’s understandable to worry about what life will be like after lockdown – including sending children to school, job security, finances or adjusting to an unfamiliar routine.
Here are some expert tips on how to cope after lockdown and during the transition.
Talk to friends and family
Talking to loved ones is important if you’re concerned about children going back to in August and speak to the school or local authority about what measures they have in place to make the transition easier. In addition, have an open conversation with employers about their plans for a phased return to normal. Whatever your concerns, talking to your friends and family can really help to ease the burden and let them know how you’re feeling in order to provide reassurance and support. You may also find that you’re not alone.
Plan things you enjoy
It may take time to get back to certain activities such as sports, shopping, holidays and more, but a simple way to tackle anxiety is to plan ahead and make a list of things that you can do – friends you want to see, places you can visit and restaurants or cafes you can dine at. Organising things like this with family and friends will give you something to look forward to.
Establish a routine
If you’ve been working from home and spending more time with people in your household, your daily life has probably settled into a more relaxed pattern. As we head towards lockdown being eased, try and get back to a routine to make the transition a little easier. Head to bed earlier, get up before you’d be due to leave for school and work, keep to regular mealtimes and set a routine for exercise.
Get moving
It’s well known that exercise can boost your mood, help you deal with stress, tackle depression and reduce anxiety. Whether you are going for a bike ride, doing an online class, a fitness DVD or even a brisk walk in the park, getting moving and increasing your endorphins is one of the best ways to help with post lockdown anxiety.
Try to limit your news intake
While it’s important to keep abreast of the news it’s also important to take a break from watching or reading about the Coronovirus pandemic. Turn to reliable resources, avoid fake news on social media and don’t read too many opinion pieces or speculation. You can also take a tech break a day a week to take a step back and get some perspective.
Instead try to do something that’s mood-boosting such as baking, drawing, reading, gardening or walking.
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Are you a first-time buyer and wondering where to start?
When looking to buy your first property, the first thing you need to ask yourself is what you can afford. Buying a property is a long-term financial commitment so you need to consider how much you can put down on a home as a deposit as this will affect the mortgage deal you’re eligible for. The larger the deposit, the better the interest rate. You could use money from an existing property, savings, money that family is willing to gift you – and you’ll need to look at your monthly income and outgoings to determine if you can afford the commitment.
How much you can borrow?
Every lender has different lending criteria and ways of calculating how much they are willing to lend you if you are eligible for mortgage. They will look at your income, your deposit, regular outgoings and your credit rating. If you are buying jointly with a partner or family member, they will look at these for both applicants.
You can purchase a property with a 5% deposit, but lenders typically require 10 to 20% of the purchase price, and the higher the deposit the better the interest rate you will be offered. You can also use Help to Buy or the First Home Fund on first properties such as those offered by Urban Union. This means that you will receive government help with your deposit by way of an interest free loan.
Working out what you can afford
Start with your annual income before taxes along with your deposit amount. You can use a mortgage calculator to work out the mortgage you will be offered and what your monthly repayments will be. You’ll choose between a variable rate mortgage or a fixed-rate for 2, 3 or 5 years although you can also take out a 10-year fixed rate mortgage deal.
Other expenses will need to be taken into account including Stamp duty (LBTT here in Scotland) although you may not need to pay this if you are buying a property below the threshold. You’ll also need to consider buildings insurance, moving costs, estate agents fees (if selling a property), solicitor fees and mortgage arrangement fees – but these will vary depending on what sort of property you are buying.
When buying a home from Urban Union the price listed is the price you pay, with no ‘offers over’ or competition from other buyers. You simply need to go through the process and pay a reservation fee, which is deducted from your purchase price. Talk to us to find out more about the process.
Lastly, when calculating what you can afford remember that the unexpected can happen so it’s a good idea not to push yourself to your spending limit.
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