3 Affordable Government Schemes to Help You Become a Homeowner
Struggling to scrape together a deposit for your first home?
With the recent rise of first-time buyers qualifying for government mortgage schemes, there are more and more affordable ways to get onto the property ladder.
But whilst there is help on offer, navigating the many options available can be tricky. Who are these schemes for? How do you qualify? And most importantly of all, which option is best for you?
We’ve put together a brief guide to the key three government help schemes available; Shared Ownership, Help to Buy and Starter Homes.
One of these may prove your ticket to becoming a homeowner!
Determining the Best Scheme for You
Before deciding on the most appropriate scheme to help with your mortgage, consider the following questions:
– How big is my deposit? If you know you can afford monthly mortgage repayments but getting a deposit together seems near impossible, then a Help to Buy scheme could be for you. A Help to Buy ISA will help to give your savings a much-needed boost, whereas a Help to Buy equity loan is a great option for anyone hoping to put down a 5% deposit.
– Would I consider a new build? Yes? Then once again a Help to Buy scheme could be the way to go. The Starter Homes scheme is new and also available on new builds only.
– Would I be happy owning only a share of a property? Reduce the costs of being a first-time buyer with shared ownership. This particular scheme lets you buy a set share of a property – usually between 25-75% – leaving you to only pay rent on the remaining share.
Mortgage Schemes – An Introduction
Below are three current government mortgage schemes that may help you to secure your first home. Read on, for a better understanding of which may be the best option for you.
Help to Buy
Help to Buy schemes offer help in a variety of ways; guarantee schemes, equity loans and the London-specific help to buy scheme. A guarantee scheme works just like a standard mortgage. It’s available on any type of property, but you are only required to put down a 5% deposit.
An equity loan works on a similar principle; you can put down a 5% deposit but on a new build property only. The loan is offered on the basis that the Government will lend you up to 20% of the property price, which you are then required to start paying interest on after 5 years. This makes it a great quick fix solution if you’re struggling to save for your initial deposit, but it’s important to consider how much you’ll need to pay further on down the line.
Living in London? There is a separate Help to Buy scheme for house-hunters in Greater London looking to put down a 5% deposit.
The Starter Home scheme is available to first time buyers under 40, on new build properties only. Most importantly, it offers buyers a 20% discount when purchasing a property. However with this scheme, once purchased at the 80% market value, your property cannot be resold or let for at least five years. So before you put in any offers, be sure to do your research and take care that the property and location are somewhere you see yourself for the foreseeable future.
This is a scheme for anyone who doesn’t currently own a home (so you may have previously owned one!), earns less than £80,000.00 (£90,000 inside London) and have the savings to cover the 10% deposit of the share quantity they’re planning to purchase.
Not all lenders are willing to offer a mortgage being taken out on a shared property, but with help from a trusted broker finding the best lender for you shouldn’t prove difficult.
Getting a home needn’t be a headache! If you’re looking for a mortgage or simply some advice, we are here to help. Contact us today on 01702 619221.