Housing schemes to help you buy your home

We understand the difficulties and complexities that come with buying your first house. There are several housing schemes designed to help you with buying your home. They are available to first-time buyers and people who are looking to purchase their next home. Certain criteria are applied for all these schemes but as experts in this sector, we can discuss these with you and advise you on the best options for your circumstances.

Help to buy scheme

This is probably one of the most well-known schemes and has been available since 2013. It provides a government loan to help you buy a new build property. The benefit to you is you don’t need a large deposit to be able to do this but the following will apply:

· A minimum deposit of 5% of the asking price

· You contribute 80% of the property price

· The government will have a 20% equity share of your property until the loan is repaid

Not every developer is registered on this scheme so it’s always a good idea to check before you pay a deposit and reserve your plot. You don’t have to be a first-time buyer to benefit from this scheme but you can’t have a mortgage on another property. The house you’re buying must be your only residence so if you’re already a property owner, you must sell your house before you can buy a new house using this scheme.

The current plan is for this particular scheme to finish in March 2023. As a result, there will be many customers looking for advice on how to exit this which is something we can help you to do.

First homes scheme

This is the most recent of the government schemes to be introduced and is designed to help first-time buyers, in particular key workers, to buy their own homes. Properties are discounted by as much as 50% but typically by 30% of the market value. These discounts are specific to the property which means when it’s sold, the discounts still apply.

There is a minimum deposit of 5% based on the discounted house price but you will own the property in full at the end of the term. You must be earning less than £80,000 a year and your mortgage needs to cover at least 50% of the purchase.

The mortgage guarantee scheme

This scheme has helped to increase the number of 5% mortgage deposit products available for individuals who have a good credit rating. Aimed at property buyers who only have a small deposit but can afford the higher mortgage repayments, this is another government-backed scheme. The minimum deposit is 5% of the house price and the maximum value of the house is £600,000. Buyers can apply for a 95% loan to value mortgage through lenders who are part of this scheme.

Introduced as a temporary measure, this scheme is due to close on 31 December 2022.

Shared ownership scheme

As the name suggests, this scheme enables you to buy a share of your new home, between 10% and 75% of the house value. The remaining amount you pay rent to a housing association, hence the shared ownership. As you become more financially able, you can buy further shares in your home and reduce the amount of rent you pay. The ownership models are different so it’s always good to check with us to understand which one is best for you.

Right to Buy and Right to Acquire schemes

Renting a council house or being a housing association tenant, these schemes will enable you to buy your home. Discounts can apply to you of up to £112,800 depending on your location and your eligibility.

For many, this is a huge commitment which is why it’s always good to speak to our experienced advisers at Five Star Mortgages who can help guide you on what will be involved. We can also give you a realistic idea of the costs and your financial responsibilities.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Frequently asked questions

Q. Do I have to use the mortgage broker and solicitor recommended by the builder or housing association?

A. No, you don’t have to use who they recommend for the whole process but they may insist that you’re affordability is checked with their contacts before you can proceed. These are checks we would carry out anyway but once they have been completed you can deal with your preferred broker or solicitor.

Q. What is a Housing Association?

A. These are not-for-profit organisations that specialise in building, renting, and selling affordable homes. Aimed at people on low incomes or who need extra support to afford a place to live. There are many Housing Associations across the UK that have gradually replaced council housing.