Mortgage schemes
If you have no deposit or are on a low income, it can be difficult to take that first step onto the property ladder without help. You may not have the option of buying a property with family or friends, or you may choose not to involve them in your financial decisions. There are several Government schemes available that can help boost your home-buying potential, making your first home purchase much more achievable.
Government Help to Buy Scheme
Please note, the Help to Buy Scheme changes often, and the loan amounts and specific details of the various schemes can vary depending on your location and circumstances. To ensure you’re getting the most up-to-date information, it is best to check with a First Mortgage advisor, who will be able to provide more information.
Help to Buy is a government scheme, which can help first time home buyers get a new-build property with just a 5% deposit. They will loan you 20% of the purchase price (40% in London), meaning you only have to find a mortgage for 75% (or 55% in London) of the property price. You pay back the loan as you pay back your mortgage, except there is no interest for the first five years on the Government part of the loan (known as equity). It’s a good way of keeping repayments low as you find your feet on the property ladder. The scheme is available until 2021.
Help to Buy – how it works
Your deposit – 5% – £10,000
Equity loan – 20% – £40,000
Mortgage – 75% – £150,000
Total – £200,000
| Country | Name of scheme | How it works | Any restrictions? | Maximum value of property | Who is eligible? | Further Info… |
| England | Government Help to Buy Equity Loan | You borrow money from the Government to help you buy a newly built home. – You pay in at least 5% of the property price.
| When you sell the property, you pay back the loan plus a share of any increase in value. In London the upper loan limit is 40% to reflect current property prices. | £600,000 | First-time buyers and existing homeowners. | Help to Buy
|
| Northern Ireland | Co-ownership | Co-ownership is a large housing association in Northern Ireland. They allow you to buy a share of your home – between 50% and 90% – and pay them rent on the rest. As time goes by and you can afford to buy more, you can increase your share of the property. | You must purchase at least 50% of your property and it must be where you live, rather than an investment property. | £175,000 | Buyers over 18 who could not afford to buy without the co-ownership initiative. | More info |
| Wales | Help to Buy – Wales | Shared equity loans allowing you to buy new build properties | You need to contribute at least 5% towards the cost. The Welsh Government give you a shared equity loan of up to 20% and the rest is from a mortgage lender. | £300,000 | First time buyers and movers wishing to purchase new-build homes | More info |
| Scotland | The Affordable New Build scheme and the Smaller Developers New Build scheme | – the main Help to Buy (Scotland) Affordable New Build Scheme is available to larger homebuilders while the Help to Buy (Scotland) Smaller Developers New Build Scheme is available to smaller house builders. – the agent administering the scheme will identify which one your application can be processed under. | The Scottish Government will help you buy a property by taking an equity stake of up to 15% – you need a mortgage for at least 85%. | £230,000 completing on or before 31 March 2017, £200,000 for purchases up to 31 March 2018 and 175,000 for purchases on or before 31 March 2019. | Available to purchasers unable to afford a property without the Government purchasing a stake in the property. | More info |
Shared Ownership
Shared ownership is a scheme that lets you part-own, part-rent your house. It allows you to buy a share in a house that you can then make your home, as although it is shared ownership, you live in and look after your own property. These schemes are good if you don’t earn enough to buy your own place but still want to get on the property ladder and make where you live your own. Shared ownership schemes usually require you to buy between 25% and 75% of the property, then pay a reduced rent (occupancy charge in Scotland).
For shared ownership in Scotland:
http://www.gov.scot/Topics/Built-Environment/Housing/investment/grants/hso
For shared ownership in England:
https://www.helptobuy.gov.uk/shared-ownership/
Right to Buy
If you have rented from your local council for more than three years and live in England, Wales or Northern Ireland, you could be eligible to buy your home at a discounted price. How much of a discount depends on where you live and the sort of property you’d like to buy. If the place you live in used to be a council property but is now owned by another landlord or housing association, you may still be able to buy it under ‘preserved’ schemes: they usually mean that your rights as a council tenant continue after someone else has bought the property. The Right to Buy scheme has now been extended to include housing association tenants in England. In Scotland Right to Buy no longer operates but there are other schemes (link to previous Help to Buy section) that could help you buy your home.
Advisor insight – check for exclusive schemes
It’s not just government schemes that will help you buy your property. Developers, lenders and home builders often offer schemes to help people buy their homes. It’s always worth asking if there are any deals available – in fact, as a First Mortgage advisor this is something I’d look for as a matter of course if I thought it might help you get the property you want.
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