Home buying schemes options
Government home buying schemes like Help to Buy, Shared Ownership and Right to Buy help first-time buyers and home movers purchase their homes. These schemes include:
- Help to Buy equity loans
These offer up to a 20% (40% in London) loan from the Government to reduce the amount you need to borrow on your mortgage. - Forces Help to Buy
Service personnel can borrow 50% of their salary (up to £25,000) towards a deposit and fees. - Shared Ownership schemes
Buy part of a house and pay rent on the rest – and buy a bigger share as time goes on. - Right to Buy schemes
Council tenants may qualify for the right to buy the property they’ve lived in through this type of scheme.
Home buying schemes are suitable for first-time buyers and home movers with a small deposit looking to buy a home. You won’t need to save as much for your deposit as with a normal mortgage, and you could get extra help such as a Government bonus through the Help to Buy (or Lifetime) ISAs.
If you’re unsure which type of home buying scheme suits your circumstances, speak to our expert mortgage advisors. They’ll guide you to the most suitable option – and make sure you get the best mortgage deal for your needs.
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All about Government schemes mortgages
Various Government home buying schemes such as Help to Buy, Shared Ownership and Right to Buy, are in place to help eligible applicants buy a property. Also, some lenders and property developers have their own schemes to help you get onto the property ladder.
As these property schemes all come with terms and conditions and each lender has their own criteria in addition to the general terms of the home buying schemes, a broker is best placed to go through your situation and then advise you about the actual options available to you.
All home buying schemes have the aim to help you get onto the property ladder or move home when otherwise you couldn’t afford it.
The home buying schemes generally require a relatively low deposit, which acknowledges that most people struggle to save up for a deposit while paying rent every month. In other cases, there may not be much deposit available after a relationship breaks down and one or both parties have to move out or when someone has been living in a council property raising children.
Whatever the situation may be, the home buying schemes are designed to help you own your home and we are here to help you get the best mortgage deal to support your purchase.
The Help to Buy scheme has different rules and deadlines in different parts of the UK. For example, the Help to Buy England scheme has been extended until 31 March 2022, while it’s only extended until 31 March 2021 in Wales.
The Rent to Buy and Intermediate Rent schemes are only offered by certain councils and housing association, so they are not available everywhere in the UK.
The Right to Buy scheme offers different discounts from the market value of your home depending on your location, so it is important to check what the local rules are before you apply.
The actual home buying process will depend on the scheme, as a third-party organisation is involved and they have their own requirements and processes. As a broker, we can support you through the whole purchase to ensure that you are clear about your options and the next steps at every stage.
Once we established which home buying scheme is best suited for your circumstances, we check your mortgage options and your maximum borrowing. Then we help you get approved for the scheme first by working with the appropriate third parties before arranging your mortgage.
The above referenced “third parties” may include the estate agent, developer, housing association, Help to Buy agent, council and the mortgage broker appointed by the previously mentioned parties to do “financial verification”.
When we do the actual mortgage application, we will ask you for specific documents dependent on the home buying scheme and apply on your behalf to the agreed lender based on their requirements.
An important question to ask, not so simple to answer. It will depend on your income, outgoings, credit history, age, dependants, the property you’d like to buy and other factors.
The home buying scheme may also impact on your mortgage borrowing. For example, most lenders use 3% of the Help to Buy loan as a credit commitment when calculating your maximum borrowing, even though you won’t pay anything (apart from £1 monthly admin fee) to the government during the first 5 years.
There is no single rule that lenders follow when assessing your first-time buyer mortgage application. In fact, lenders tend to offer different mortgage amounts even when you present them with the same information.
For this reason, a mortgage broker can help you find out exactly how much you could borrow. We have the tools to check your maximum borrowing for Help to Buy, Shared Ownership and other property schemes or even just for a “normal” purchase without using any scheme.
The answer will depend on the home buying scheme, your personal situation and the lender chosen.
For example, the Help to Buy scheme needs minimum 5% of the purchase price, Shared Ownership requires minimum 5% of the share you buy, while you may not need any of your own money for a Right to Buy purchase.
Still, your income may not be enough to get 55% mortgage on a Help to Buy property in London. It may only be enough for 50% of the purchase price and you’ll need a 10% deposit in addition to the 40% government loan.
It’s part of our broker’s job to assess your affordability and advise you about the deposit for each scheme.
Possibly yes, although the answer will depend on the details of your credit history.
Most lenders can accommodate late or missed payments here and there, especially if everything was paid on time during the last 6-12 months.
Some lenders can also accept defaults, CCJs or even past bankruptcy, but you may only have a few lenders to choose from and the interest rate will likely be higher than if you had a clean credit history.
Yes, although the lender options are limited, as most lenders would like you to be a British or EU citizen or have indefinite leave to remain.
Those lenders who offer mortgages for home buying schemes to visa holders as well, often require a minimum residency time in the UK, minimum time left on the visa or have other criteria to meet.
Older People’s Shared Ownership (OPSO) is a type of Shared Ownership arrangement that aims to help people over the age of 55 to buy their home. This option is only available in England for homes advertised for Shared Ownership.
You can find further information here.
Home Ownership for People with Long-Term Disabilities (HOLD) can help you buy a home on a shared ownership basis. However, this home buying scheme is not just available for properties that are advertised for shared ownership, but any property in England.
You can find further information here.
Members of the armed forces are given priority when buying with the Shared Ownership scheme above everyone else. This means that if two people are applying for the same property, the army personnel will be offered the opportunity to purchase the subject home first.
As another option, the Forces Help to Buy scheme allows army service personnel to borrow up to 50% of their annual salary (maximum £25,000) and to use as a deposit when buying a home. This loan can be accepted together with the Help to Buy equity loan and on Shared Ownership purchases anywhere in the UK.
You can find further information here.
Building insurance
If you buy a house, then building insurance will be mandatory to ensure that in case the structure is damaged (e.g. by fire, flood or movement), the insurance will cover at least the mortgage amount.
Nothing else is compulsory, but of course, it makes sense to cover costly unexpected events.
Contents insurance
Contents insurance can pay for replacing your personal belongings if someone burgles your home, there is fire, you accidentally drop your new flat screen TV…and the list goes on.
Life insurance
Life insurance is a one-off payment if you were to die during the mortgage term, so the insurance can settle your mortgage. This would allow your family to stay in the property without worrying about mortgage payments at an already stressful time.
Critical illness cover
Critical illness cover would give you a lump-sum if you had a serious illness like cancer, heart attack or stroke as well as dozens of other conditions. This payment may or may not settle the mortgage, but it can help pay for treatment, let you take time off work while recovering or alter your home, if necessary.
Income protection
Income protection is designed to give you a monthly income for some time in case you can’t work due to an accident or a long term illness. This covers mental health issues as well.
Of course, all the insurances come with terms and conditions, optional features and your medical history can influence your options.
To find the right insurance cover that fits within your budget, speak to our team today. We can compare the whole market, find the most suitable cover and apply on your behalf free of charge.
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