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Everything You Need to Know About Help to Buy and Shared Ownership


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If you’re a first-time buyer looking at buying a home, you might have come across the Help to Buy scheme and something called “shared ownership schemes.” While the former is a Government scheme, the latter are run by housing associations. Both of these options can help first-time buyers get onto the housing ladder, but they work in different ways. If you’re confused about what they are, how they can help you and the differences between them, keep reading. People looking to buy their first home could benefit if they have low income or can’t save a big deposit.

Help to Buy

The Help to Buy scheme is an initiative run by the Government. It aims to help first-time buyers purchase their first home by allowing them to buy with a deposit as little as 5%. You can buy a new-build or an existing home worth up to £600,000. The scheme works in two parts: equity loans and mortgages.

Help to Buy Equity Loan

With a Help to Buy equity loan, you can get up to 20% of the value of a new-build home, so you then need a 5% cash deposit and a 75% mortgage to buy your home. Both first-time buyers and existing homeowners who want to move are eligible for an equity loan with Help to Buy. The house you want to buy must be a new-build, up to the price of £600,000. You can’t own any other property when you buy your new home. To find Help to Buy properties, estate agents in Wroxham and other towns may list them. You can also find your local Help to Buy agent.

Mortgage Guarantee

The second part of Help to Buy is a mortgage guarantee. This works like a normal mortgage, but it offers lenders the option to purchase a guarantee. This enables lenders to offer high-loan-to-value mortgages of 80% or more. For example, if you pay a 5% deposit the mortgage lender can lend you the remaining 95%. Unlike the equity loan, this is available for both new-build and existing homes. However, you can’t use it together with the equity loan scheme.

Shared Ownership

Shared ownership schemes are run by housing associations. With a shared ownership scheme, you buy part of your home, between 25% and 75%, and pay rent on the rest. You can buy a larger part of your home in the future if you want to. To be eligible for shared ownership, you need to earn £60,000 a year or less and be a first-time buyer. Alternatively, you could have owned a home in the past but can’t afford one now. If you’re aged 55 or over, you can use the Older People’s Shared Ownership scheme. With this scheme, once you own 75% of the home, you don’t have to pay rent on the remaining 25%.

When you’ve found out which scheme is right for you, start looking into the properties available while you can.

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