Help to buy and shared ownership what schemes are available for first-time buyers?
If you’re a first time buyer and looking to get your foot on the property ladder without the help to buy or the shared ownership scheme, you may well be feeling a little overwhelmed by the deposit and other costs you’ll need to be able to lay your hands on to make that dream a reality. The good news is that there are a number of government-supported schemes designed to encourage more renters to make the leap to ownership. This means that help is available, making that first home purchase much more affordable. Here, we’re outlining two of the most popular available now:
Shared Ownership
Also known as part rent, part buy, this type of scheme gives first-time buyers the opportunity to buy a ‘share’ in a property while paying rent to a housing association on the percentage that isn’t currently owned by the buyer.
Such schemes are often utilised to make new build properties more affordable and shares usually start at 25% and go in increments up to 75%. This is a good option if you don’t have a considerable deposit to play with and are looking to get the keys to your first home quickly.
Another bonus is that first-time buyers can get a mortgage on the share they are looking to buy, making it a more affordable pathway
if you don’t have a high income right now.
Better still, you can arrange to buy more shares as time goes on, which gives you a more considerable ownership percentage and therefore less rent to pay.
Help to Buy
In the latest revision of the current Government Help to Buy scheme which runs until 2023, first-time buyers can apply to purchase a new build property with just a 5% deposit. The government will then top up that amount with a 20% equity loan to be paid back by the owner after completion.
In London, this equity loan rises to 40% due to the higher cost of property in the capital, but regardless of the equity loan percentage, both are completely interest-free. This is a good deal if you can locate a new build property in your area and are accepted by the scheme.
Keep in mind that if you do want to take advantage of the Help to Buy scheme, you will be subject to a price cap. This ranges from £186,100 in the North East to £437,600 in the South East and £600,000 in London, so it pays to do your homework into the average new-build prices in your area before you start your property search in earnest.
Something else worthy of a mention is that if you are purchasing property jointly with another person, you will both need to be first time buyers or you will fail the eligibility criteria for the scheme at the first hurdle.