Affordable Housing Options

House prices have increased significantly in the last 20 years and for many, the idea of buying a property is completely unattainable. But there are some options to consider to help get you onto the housing ladder, whether you are a first-time buyer or an older person considering their options.

Help to Buy Scheme

The Help to Buy scheme was the brainchild of the current Conservative government which wanted to kick-start the economy by encouraging people to buy new build property to give house builders a boost but also wanted to offer the opportunity to buy older property to get the stagnant housing market moving.

Help to Buy offers three different products. The first is Equity Loans and the second is mortgage guarantees and finally shared ownership schemes.

Equity Loans

You can get an equity loan on any newly built property worth up to £600,000 and this loan can be used by both first-time buyers and also people who already own a property but can’t afford to move on.

You will pay at least 5% of the purchase price as a deposit and you will then get an Equity Loan from the government for up to 20% of the purchase price. The remaining 75% will be covered by a mortgage.

You have 5 years of fee-free borrowing, after which you will be charged annual fees of 1.75%, which will increase every year. You can get an idea of what these fees are, as it is calculated using the Retail Price Index, with 1% added on.

An Equity Loan is paid back when you sell your home or after 25 years, whichever comes first. How much you pay back depends on the value of your home.

You cannot sublet your property if you use the Help to Buy: Equity Loan scheme and it must be your only property.

Mortgage Guarantees

You will provide a deposit of at least 5% of the value of the property you want to buy and the difference is that the government will guarantee your loan to the mortgage company rather than to you.

The scheme is similar to the Equity Loan, however, these loans are not tied to just newly built property - you can choose to buy an older property.

The property has to be your only property, worth up to £600,000, not be a shared ownership property and also not be rented out after you buy it.

A number of mortgage lenders are taking part in the scheme and you apply directly to them. They will check to see if you can afford the repayments. 

Shared Ownership

This option offers you some flexibility where you can purchase a percentage of a property, from 25% to 75% and then you pay rent on the remaining portion of the property. This allows you to purchase a property for below the market value. You need to take a mortgage out to pay for your share of the property.

The requirements to purchase a shared ownership property are:

• Your household must earn less than £60,000 everywhere in the UK apart from London
• In London, your household must earn less than £71,000 for a 1 or 2-bedroom property or £85,000 for a 3-bedroom property
• You’re a first-time buyer or
• You used to own a home but now can’t afford to buy one
• You live in a council property
• You live in a housing association property

You can add to your share of the property at any time. The cost of any additional share will depend on the value of your home. You can sell your property once you own 100% of it and the housing association has the right to buy it back from you. This applies for 21 years after you fully own the home.

You can see there are a few options open to buying an affordable property. You just have to choose which one suits you best.

If you would like help and advice on buying an affordable house, contact our experienced Conveyancing Team at 01264 353411 or by email at conveyancing@bsandi.co.uk and we’ll be happy to help.