Help To Buy & Shared Ownership
Help to Buy is a government backed house purchase scheme designed to help ordinary hard working people get on the property ladder. The objective is to get more people owning their own home which contributes towards economic growth for the country.
There are essentially two schemes available called “Equity Loan” and “Mortgage Guarantee”.
Equity Loan Schemes are aimed at first time buyers who want to buy a new-build property up to the value of £600,000. Home movers can also apply if they do not own any other property at the time they buy the new home.
The main advantage is that if you buy a property for £200,000 then you just need to find a 5% deposit (£10,000) instead of having to find a bigger deposit. You just need to get a mortgage for 75% of the property value which is ideal if your income cannot support a higher loan. The government then lends you the remaining 20% and you do not have to pay any fees on that 20% for the first five years.
The downside is that if your property increases substantially (lets say it doubles in value) then the original 20% Equity Loan of £40,000 increases to £80,000 as the government retains 20% equity of your property.
The help to buy mortgage guarantee works the same as any other mortgage but the government give the lender a guarantee which reduces the risk for the lender allowing for a higher loan to value being offered.
Shared Ownership is a scheme provided by Housing Associations to allow council or housing association tenants the chance to buy a share in a property. You can buy a share from 25% to 75% of the property value. You will have to take out a mortgage on your share and pay rent to the housing association on the rest.
You have to be a council tenant, a first time buyer and your household income cannot exceed a certain amount.
Once you have paid off your mortgage you can apply to buy the remaining shares from the Housing Association at market value which is called staircasing.
Our Mortgage Advisers have experience in mortgages for shared ownership schemes. This gives you the peace of mind that you are getting the best deal and that the mortgage process runs smoothly.
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