In my blog this month, I aim to explain exactly how the Help to Buy scheme works and the process you will go through. Here are some of the most frequently asked questions I try and answer....

I want to buy a new home from a developer through the Help To Buy Scheme- will the conveyancing process be any different?

The answer is yes, but it should not be any more difficult for you. Whilst many developers require contracts to exchange within 28 days, developers will appreciate that the correct procedure must be followed, and certain steps must be taken to secure your funds.

So what are the first steps?

Firstly, you must find a registered house builder who is participating in the scheme. Developers often advertise that they are taking part in the scheme, but if you need help finding your new home, your local Help to Buy Agent can assist you with your search.

Who is the Help to Buy Agent and what do they do?

The Help to Buy Agent will help you find a participating development and will support you with your application for an equity loan and keep you updated throughout the process.

From the 2 January 2020 three Help to Buy Agents have been appointed to provide the scheme in England and your local agent will depend on where the property is located. The following link will help you to work this out: https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/

What happens next?

Once you’ve found your new home and it is confirmed that you meet the scheme requirements, you will need to reserve the property with the developer.

You will do this by completing a Property Information Form and Declaration and the developers Reservation Form. You’ll be asked straightforward questions about the property and about your income (you should have all this to hand as you’ll need it for your main mortgage application).

The developer will ask you to pay a reservation fee to secure the property and you will be committed to the developer’s terms and conditions.

The completed forms will be sent to the Help to Buy Agent and if the forms are acceptable and the application accepted, the Help to Buy Agent will issue an Authority to Proceed (ATP). This will include the amount of the loan and a personal worked example of the equity loan. The ATP is valid for three months.

Do I need to do anything else?

Once you have submitted the forms to the Help to Buy agent, it is at this stage that you should be speaking to a financial adviser. They will guide you through your main mortgage application. It is a condition of the Help to Buy Scheme that your main mortgage is place in with a qualifying lender. You will not be able to proceed with the equity loan without this.

If you have not already done so you will also need to confirm your instructions with the solicitor who is going to act on your behalf in the purchase. This is because, they will also be sent a copy of the ATP together with a Solicitor’s Information Pack.

Once the ATP has been issued, can I proceed?

No, before contracts can be exchanged your solicitor must disclose a copy of your ATP to your main lender together with the supporting guidance notes and additional information. Your main lender will review this and confirm that any incentives offered by the developer do not affect the valuation of the property and that they are happy to proceed with the equity loan.

Your solicitor will also need to obtain authority to exchange (ATE) from the Help to Buy Agent. The ATE is confirmation that the Help to Buy funding is in place. It is the green light for your solicitor to exchange contracts.

In order to obtain the ATE your solicitor will need to hold the signed the equity loan mortgage deed and must submit a Solicitors Form 1 (a standard document which cannot be amended), confirming that the details of the purchase match those set out in the ATP. This is submitted together with a copy of your mortgage offer and any valuation carried out by your main lender.

How long does this take?

The Solicitors Form 1 must be sent to the Help to Buy Agent at least 5 working days before exchange of contracts. Usually the ATE is provided within 3 working days, however sometimes there are delays as amendments may be required.

Is that the end of the process?

Once contracts are exchanged, you can sit back and relax as the contract is now legally binding and the property will be yours, once it is built. Your solicitor and the developer will keep you updated as the build progresses.

There will be additional steps for your solicitor to take once a completion date is known, to make sure that the main mortgage and the equity loan are released. On the day of completion, the equity loan will be sent from the Help to Buy Agent straight to the developer to help ensure things run smoothly. The balance of the purchase price will be sent to the developer by your solicitor.

If you want to find out more then contact us on 0800 011 6666.