As we leave 2018 behind many of us are looking at changes for the New Year, a new diet, new hobby or new job. Some will be looking for a bigger change, with a new home high on the to-do list. If you are looking for that extra bedroom, garden or garage, or perhaps looking to purchase your first home then what are your options? What schemes can you take advantage of, and what benefits do they bring?
The Equity Loan scheme makes it possible for you to buy a new-build home priced up to £600,000. With the Government lending you up to 20% of the cost of the new-build home, you’ll only need a minimum 5% cash deposit and a 75% mortgage to make up the rest.
You have the ability to increase the amount of deposit you put in, reducing the amount of mortgage required even further, giving you access to even more products from lenders, which usually means better interest rates.
You won’t be charged interest on the 20% loan for the first five years of owning your home. From year six onwards the equity loan will be subject to an interest only payment of 1.75% per annum on the outstanding amount (which will increase each year by Retail Price Index (RPI) plus 1%). We provide an illustrative example calculation when you apply too but we also recommend that you seek financial advice to determine how much your monthly payments will be at this point.
To pay off this equity loan you have a few options, and they should be fully understood before applying. You can find further details of these options in this blog post here
When you are looking to pay your loan back you should speak to the mortgage administrator who can be found here
Shared Ownership allows you to buy a share in a new home, ranging from 25% to 75%, depending on what you can afford. A housing association owns the remaining share, and you pay a reduced rent on that share. This means that you only need to get a much smaller mortgage to buy the property, and a much smaller deposit.
You often have the ability to buy more shares as and when you can afford them; this is called Staircasing, but does depend on the Housing Association. If this is something you are interested in then you should speak to the Housing Association before applying. The larger the share you own the less rent is payable to the Housing Association, and you may be able to eventually own 100% of the property if you want to, at which point you will pay no rent at all.
As a home owner, you will be responsible for the maintenance and repairs on your home. If you live in an apartment, your landlord will be responsible for the communal areas and this may come with an additional service charge.
Older Person’s Shared Ownership (OPSO)
The scheme works in a similar way to Shared Ownership, where you buy a share in the new home, which will range from 25% to 75%, depending on what you can afford. Through OPSO the maximum share you can buy is 75%. This means that you only need to get a smaller mortgage and smaller deposit to buy the property.
A housing association owns the remaining share and you will pay a reduced rent on that share. You can buy more shares as and when you can afford them - this is called 'Staircasing’- and as you buy more shares, you will pay less rent. If you choose to buy the maximum 75% share, you will pay no rent on the remaining 25%.
To apply for these properties you must be over 55 years of age and unable to afford to purchase a new home without some assistance. Contact us if you are unsure if you qualify.
If you have a long-term disability then the HOLD scheme could help you buy a home for sale on a Shared Ownership basis. You could buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share.
If you feel the HOLD scheme would benefit you, and you meet the necessary eligibility criteria, its then up to you to search for a suitable second hand property on the open market. You also need to approach a local Housing Association with the prospect of buying this property under the HOLD scheme. If willing, the Housing Association will apply for HOLD grant funding before selling the property to you on a Shared Ownership basis.
Note HOLD is not available as a right and participation of providers to make HOLD available is entirely at their discretion.
Armed Forces Scheme
The Forces Help to Buy Scheme is specifically for Armed Forces personnel. This scheme allows you to borrow up to 50% of your salary, interest free, to buy your first home, move to another property on assignment or as your families needs change. Enquiries for this scheme should go through your CO.