An alternative route to home ownership
Help to Buy
This scheme supports people who have at least a 5% deposit, enabling them to purchase a home worth up to £600,000. Help to Buy offers two options for first-time buyers and existing owners—the equity loan and the mortgage guarantee.
Option 1: Equity loan
This is for new-build properties only. On top of your deposit of at least 5%, the government will lend you up to 20%of the value of your property through an equity loan, which can be repaid at any time or on the sale of your home. You will only need to secure up to a 75% mortgage from a bank or building society. This is available until 2016.
Option 2: Mortgage guarantee
This is for both new-build and existing properties. You’ll need a deposit of as little as 5%, and can be a a first-time buyer or existing homeowner. Under this scheme, the government offers banks and other mortgage lenders the option to purchase a guarantee on their mortgage loans. Do remember, though, that you’re still fully responsible for your mortgage repayments.
So if you have a 5% deposit, you’ll need to take out and pay back a 95% mortgage, which isn’t always easy. This is available until January 2017.
This is where you buy a share of your home and pay rent on the rest—usually sharing ownership of the property with a housing association or local authority. You pay rent to your landlord for part of the property and you get a mortgage on the rest. You’ll be able to buy further shares in the property at a later date.
To qualify for the scheme, you’ll have to be a first-time buyer and be able to prove you can cover a mortgage for part of the property. Priority is usually given to housing association or local-authority tenants, but other people in housing need may also be considered for the scheme. You’ll have to sign up to a housing association to qualify, which may have an extremely long waiting list.
You can find a list of landlords who provide accommodation through shared ownership by visiting www.sharetobuy.com. If you’re 55 or over, you can get help from another scheme called Older People’s Shared Ownership. This works in the same way, but you can only buy up to 75% of your home. Once you own 75%, though, you won’t have to pay rent on the remaining share.
Buying your Council house with “Right to Buy”
If you’re a tenant of a council property then you may well be entitled to become the owner of your home. What’s more, you could find your home is offered to you at a friendly discount. The size of the discount will vary according to how much the house is worth, where you live and how long you’ve been a tenant. But before you jump in, speak to local estate agents about the saleability—or rentability—of your home.
Find out more on how you could buy your council house at gov.uk
Read more articles by Jasmine Birtles here