Types of Government Schemes for Existing & First Time Home Buyers - Mortgage Squared

You might have heard recently in the news about a new Government backed scheme for first time buyers called Help to Buy.  Where the Government will lend fist time buyers who want to buy a “New Build” house. Under the scheme you can borrow up to 20% of the purchase price interest free for the first 5 years as long as you already have 5% of the deposit saved up.

You might be interested to know that there are several schemes available to help people in the UK get on the property market or secure a new home.  Below we go through all the schemes available.

Help to Buy

This scheme helps those with a small deposit.  The property must be no more then £600,000 and must be a new build property. Those eligible can receive an interest free (for the first 5 years) equity release loan to help raise the funds required for the full deposit. You cam borrow up to 20% of the purchase price interest free. If you live in London you can borrow up to 40%. This scheme has been extended to 2023 however it is for first time buyers only. This scheme is only available in England however other schemes are available for Scotland, Wales and Northern Ireland.

READ  Help to Buy Scheme for first time buyers/movers

Right to Buy/Right to Acquire

If you rent your property from your local council this scheme is to help you buy where you live if you are eligible. It allows tenants who qualify to buy their rented property from their local council. Usually you need to have rented a property from the public sector such as council, NHS or housing association for 3 years to qualify. Northern Ireland and Wales have similar schemes available. The size of the discount you would receive depends on the property type and which council area you live in.

Shared ownership

This scheme is where you buy a share of a home from the landlord who is usually the council or a housing association.  You then rent the remaining share. You would require a mortgage to buy your share which could be anything from a quarter to three quarters of the property. You then pay a reduced amount for the rent on the share of the property you don’t own. In some cases you can choose to buy a bigger share in the property up to 100% of it’s value. Recently eligibility restrictions have bene lifted opening up this type of house purchase scheme to many more people. If you have a household income of less then £80,000 then you could qualify (£90,000 in London)

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People with disabilities

People with long term disabilities (HOLD) can buy their home with the shared ownership scheme. You can only apply for HOLD if the property through the other home ownership scheme don’t meet your requirements, for example you need a ground floor property.

Older people

If you are aged over 55 you can get help from a scheme called Older Peoples Shared Ownership. This scheme works the same way as the standard shared ownership method but you can only purchase up to 75% of your home. Once you do own 75% of your property though you are not required to pay rent on the remaining share.

Shared equity schemes

With this scheme you own all your property and you have a loan on part of your deposit.  The Help to Buy equity loan scheme is for all first time buyers however is only available to new build properties only. Scotland, Wales and Northern Ireland have their own scheme that runs differently to England’s.

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Starter Home scheme

This is a new Government plan which has 200,000 new build homes available to first time buyers under 40 only.  These properties have at least a 20% discount on the present market price. Meaning it’s easier for first time buyers to get on the property ladder. The discounted price for these new build homes should be no more then £250,000 outside London and £400,000 in London.

If you feel you might qualify for any of the above schemes then contact Mortgage Squared and we can give you free and impartial advice on the best course of action and how to proceed.

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