What Schemes Are There To Help First-time Buyers?
There are a variety of schemes to help FTBs, including Help to Buy- New Build, Shared Ownership, Shared Equity, 95% Mortgage, Family Assist Mortgages and Right to Acquire.
What Is The Help to Buy Scheme
Government-backed Help to Buy schemes provide equity loans for first-time homebuyers in England who wish to purchase newly constructed homes. It cannot be used to buy a second home or buy-to-let property. You can only use this to purchase your primary residence. You need at least 5% of the purchase price as a deposit.
What are the criteria to be able to use the help to buy scheme?
From the information found on the official Government website, the criteria are:
You must be:
- 18 or over
- a first-time buyer
- able to afford the fees and interest payments
You cannot get the equity loan if you have ever:
- owned a home or residential land in the UK or abroad
- had any form of sharia mortgage finance
You can apply on your own or with other people. All applicants must meet the eligibility criteria.
If you’re married, in a civil partnership, or cohabiting with your partner (and you plan on continuing to live together), you must make a joint application.
There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.
The Government website also states that the property must be:
- a new-build
- sold by a Help to Buy registered homebuilder
- the only home you own and live in
It must not have been lived in by anyone before you buy it. There’s also a ‘maximum property purchase price’ limit for the home you buy, depending on which region it’s in. You can buy a home up to and including the maximum property purchase price limit.
How Many People Use The Help to Buy Scheme?
The Help to Buy (HTB) scheme is designed to help people buy new-build homes. The number of people who use the HTB scheme is from the time of writing this blog is more than 320,000 people have used the help to buy scheme to help them buy their first home.
Buying Through Shared Ownership
From the information found on the official Government website, the shared ownership scheme is:
When you buy a home through a shared ownership scheme, you buy a share of the property and pay rent on the rest. The share you can buy is usually between 25% and 75%. You can buy a 10% share on some homes.
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What Is The Eligibility For The Shared Ownership Scheme
You can buy a home through shared ownership if both of the following apply:
- your household earns £80,000 a year or less (£90,000 a year or less in London)
- you cannot afford all of the deposit and mortgage payments for a home that meets your needs
One of the following must also be true:
- you’re a first-time buyer
- you used to own a home but cannot afford to buy one now
- you own a home and want to move but cannot afford a new home suitable for your needs
- you’re forming a new household – for example, after a relationship breakdown
- you’re an existing shared owner and want to move
Some shared ownership homes in a ‘designated protected area’ are only available to buy if you have a connection to the area. If you buy one of these homes, you:
- may only be able to buy a share of up to 80%
- must sell it back to the landlord or a buyer nominated by the landlord – you cannot sell your home on the open market
Older people
If you’re aged 55 or over, you can buy up to 75% of your home through the Older People’s Shared Ownership (OPSO) scheme. Once you own 75%, you will not pay rent on the rest.
Disabled people
You can apply for a scheme called homeownership for people with a long-term disability (HOLD) if other Help to Buy scheme properties do not meet your needs; for example, you need a ground-floor property.
How Shared Equity Works
Shared equity mortgages allow a buyer to put down a small down payment (at least 5% of the purchase price), take out an equity loan for a portion of the property’s worth (typically 20%), and then take out a mortgage for the remaining amount.
Help To Buy is the UK’s largest shared equity scheme. Others are owned by real estate developers or cater to specific sorts of borrowers (i.e. key workers). Despite its name, a shared equity property will be entirely yours.
According to figures from the Ministry of Housing, Communities & Local Government in March 2020, over 270,000 properties have been purchased with an equity loan since its debut in April 2013. Around 82 percent of these purchasers were first-time buyers.
What is a 95% mortgage?
A 95 percent mortgage is a loan that allows you to acquire a property with at least 5 percent but less than 10 percent deposit of the purchase price.
Your deposit is the amount of money you’ll need to put down on the house in order to cover the entire buying price.
Right to Buy Overview
Right to Buy allows most council tenants to buy their home at a discount. You apply via the Council. The discount will be determined by the length of time you have been a tenant. It can often mean that the applicant does not require any additional deposit to fund the purchase.
