Everything you Need to Know About Shared Ownership, Help to Buy & Government Schemes
If you want to buy a home but you are concerned because you feel as though your deposit isn’t high enough to secure your foothold on the market, then you are not alone. Luckily, there are plenty of government schemes available in the UK and there is also the option of shared ownership.
Equity Loan Scheme
The equity loan scheme is available to FTB or homeowners that want to purchase a new build. The property has to be your primary residence and you can’t use it to buy a property that is going to be your second home. You’ll need 5% of the purchase price as a deposit but you can borrow 20% of the purchase price if you want. In London, this is increased to 40%. The amount is interest-free for the first 5 years, but the loan is interest only. You can repay your loan at any time, but you will need to pay a part payment of 10% of whatever your home is worth when you do repay.
Right to Buy & Right to Acquire
Right to Acquire is a scheme that’s being offered in England. It’s geared to those who do not have the Right to Buy scheme. You can apply to buy the property that you are renting right now, at a discount. The discount will depend on the location you live in and the value of the property you’re buying. You’ll need to have rented from the public sector for three years before you can buy a property under this scheme. The three years don’t have to be consecutive.
Shared ownership is where you buy a share of your home from the landlord. They will usually be a council or even a housing association. You will pay rent on the amount of value that is still owed on the property. You will need to take out a mortgage to buy your share. This can be as little as 25% or it can be as high as 75%. Either way, it’s important to know that you will pay reduced rent on whatever is left, so putting down more can be beneficial. If you choose to put down 25% of your property value, you need to know that you can staircase at a later date. This is when you will take out another loan and buy more of the property.
The great thing about staircasing is that you don’t have to do it at all if you don’t want to. In fact, some people choose not to. If you want to own your property or if you want to be in a position where you can gain an asset without having to worry about the long-term concerns of renting, then staircasing can be a fantastic option.
For more information, visit our Shared Ownership website page – https://www.smithsfinancial.co.uk/shared-ownership/
If you are considering purchasing or remortgaging, contact us today on 0800 001 6515 to discuss your options.