Owning a Home: What Financial Support is there to Get Started?

With financial pressures increasing as we all continue to deal with a period of uncertainty, we thought it would be timely to provide a more in-depth look at what financial schemes are currently available for prospective homeowners.

With a commitment to getting people onto the housing ladder and helping prospective owners purchase their dream home, the government runs several schemes with an aim to make it a little easier to get there. Lets take a little time to consider which may be the best option for your circumstances.

HELP TO BUY: EQUITY LOAN

The Help to Buy: Equity Loan was launched in April 2021 and replaces the old Help to Buy scheme. It is a scheme just for first-time residential property buyers and differs from the older scheme as it incorporates regional property price limits to further guarantee the scheme is accessible and focused on those who need it most.

The new scheme is set to run until March 2023 and works through the government lending homeowners up to 20% of the cost of a newly built home, rising to 40% for homes in London. It is fully focused on first-time buyers and no one else will be eligible for this scheme. Regional price caps differ dependent on area with the maximum property price in London set at £600,000 while the East Midlands cap is £261,900.

The scheme helps prospective homeowners reach a higher deposit level, enabling them to get an affordable mortgage.

MORTGAGE GUARANTEE SCHEME

The Mortgage Guarantee Scheme was launched in April 2021. It is designed to help increase the supply of 5% deposit mortgages for households with appropriate credit by supporting lenders to offer these products using a government backed guarantee on new 95% mortgages. This scheme will back mortgages up to 31st December 2022.

The scheme is in place to increase the supply of 95% loan to value mortgages by supporting the lenders through the government backed guarantee. The guarantee compensates the mortgage lender for a portion of net losses should repossession ever occur.

SHARED OWNERSHIP

If affording the mortgage on 100% of a home is not within your budget, the Shared Ownership Scheme may be a good option for you and your family. Shared Ownership gives you the chance to buy a share of your home, usually between 10 and 75% of its overall value and you will pay rent on the remaining share. As time progresses you may have the chance to buy bigger shares and eventually own the whole home.

The government has launched a new Affordable Homes Programme 2021-2026 which has taken down the Shared Ownership scheme from 25% to 10% allowing even more people to get onto the property ladder. Shared owners will also have more freedom over elements of their ownership, and selling their home, with the chance to take control of the resales process from the landlord earlier than before.

You may be able to buy a home using this scheme if:

• You have a household income of £80,000 a year or less (£90,000 in London)

• You are a first time buyer

• You used to own a home but can’t afford to buy one presently

• You are an existing shared owner

Shared Ownership allows you to buy both new build and existing properties.

 

RIGHT TO BUY

The Right to Buy Scheme has been in operation for many years and helps council and housing association tenants to buy their home with a discount. This discount is up to £84,600, or £112,800 in London. The scheme is only for tenants in England.

The Right to Buy Scheme is something which appeals to many housing association and council tenants and landlords in this sector have to provide adequate information to give their tenants this opportunity. For more information the government’s Right to Buy Agent service can be invaluable.

Buying your first home or a residential property at any time in your life is a huge expense, so taking advantage of the schemes available will help to make it a little more manageable and for some people, possible at all. If you are unsure whether any of the current schemes would apply to your circumstances it is worth taking the questionnaire on the HM Governments Own Your Home website.