Do you need help from a special government backed scheme?
Options like Right to Buy, Shared Ownership, Help To Buy and the Mortgage Guarantee Scheme often come with restrictive lending criteria and fewer lenders. At IMA we can pick the right option for you
With high property prices and higher rental costs it is becoming difficult to save for a deposit. There are several schemes available to help get your foot on the ladder. Shared Ownership, Help to Buy and Right to Buy are the current most popular options but these will change with new deals like Starter Homes possibly coming out later next year.
These schemes are all limited to specific properties typically new homes or recently built properties. However they can benefit you by only needing a small deposit, 5% with a lot of lenders, to secure your property.
New build purchases can feel more pressurised due to the selling requesting that exchange of contracts takes place before 28 days have passed.
Shared Ownership
As it suggests, with this scheme you purchase a percentage of the property from either the current private owner or a housing association. The share is often between 25%-75% with rent paid to the housing association for the remaining share. You can usually purchase with a 5% upwards deposit however there are affordability assessments that need to be passed not only with the mortgage lender but the housing association too.
Right to Buy
If you are currently renting a local authority owned property you might be able to apply for the ‘right to buy’ this property from the council. You could be eligible for a discount against the current market value of up to 40%, this discount would then act as your personal deposit with most mortgage lenders. You will then only need to cover your legal costs and potential valuation fee.
Help to Buy
Using this scheme you will need a minimum of a 5% personal deposit which can be used along side a government equity loan of 20%-40% depending on the purchase location. The equity loan is offered interest free for the first 5 years and is subject to approval. The property you are hoping to buy must fall into specific categories in order to be purchased using this scheme namely being a new build constructed by a developer that is registered to be part of the help to buy scheme. Please note that you will be required to repay the equity loan on sale of the subject property. These aren’t the only elements to consider with a visit to the government website https://www.helptobuy.gov.uk and a subsequent conversation with an experienced mortgage adviser is advisable.
Mortgage Guarantee Scheme
This will allow you to buy a home with a 5% deposit (usually second hand homes). The guarantee helps give the lenders confidence with low deposit borrowing. In the event of a repossession the government compensates mortgage lenders for a portion of net losses down to 80% of the property value. This is trick to use on "New Builds" and flats and a lot of lenders require larger deposits for this.
Please feel free to read our "Helping Hands" document in this link, which is our guide to buying, remortgaging and protecting your home
The government has also produced this in depth guide :
Help To Buy : Equity Loan Guide 2021-2023
Your home may be repossessed if you do not keep up repayments on your mortgage.
