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government mortgage schemes

Be it a studio apartment or a luxury mansion, owning a home is a dream come true for most of us. Besides financial security, your abode provides a safe haven. However, with ever-increasing property prices, it has become relatively challenging for first-time homebuyers to purchase a property.

Income Protection Insurance

housing schemes

That is why the UK Government introduced various housing schemes to provide affordable housing requiring as little as 5% deposit or assisting you with your deposit, the schemes currently available are listed below;

  • Help to Buy/ Shared Equity
  • First Homes Scheme
  • Help to Buy/Lifetime ISA
  • Shared Ownership
  • Right to Buy/Right to Acquire

Depending on your personal circumstances, not all schemes may be available to you. Using a Whole of Market Broker will allow you to see what options are available to you, helping guide you and check the eligibility/criteria and assessing which lender suits your needs and offers the most competitive Mortgage.

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Income Protection

Help to Buy/Shared Equity loan

The Help to Buy: Equity Loan is a loan from the government that you put towards the cost of buying a newly built home in England. This. Scheme is now only available for First Time Buyers. Separate schemes are available in Wales and Scotland. There is also a Scheme called Shared Equity available in Northern Ireland.

You must buy your home from a homebuilder registered for Help to Buy: Equity Loan. You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the price of a new-build home. You must have at least 5% of the property value to put towards the deposit yourself.

The amount you pay for a home depends on where in England you buy it. This information is available on the Help to Buy Website and is subject to change.

The Equity Loan is interest free for a period of 5 years and is secured against your property as a legal charge. After the first 5 years you will start to be charged interest.

The percentage of the Equity Loan provided will be the value of the amount required to repay the scheme in the future. For example, if you buy a house at a value of £200,000 contribute 5% deposit and borrow 20% via the Help to Buy scheme. If you later sold that property for £250,000 you will need to repay 20% of the increased value.

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Income Protection Insurance

What is

First Homes Scheme

This is the latest addition to the suite of Schemes launched in June 2021 therefore very much in its infancy with limited availability, this scheme is where New Build builders must provide a minimum of 30% discount up to 50% when you buy an eligible property. Unlocking the ability for you to purchase a newly built property for a much lower price.

This scheme is only available to First-time Buyers on selected properties, in available locations and sold from eligible developers. There is a minimum personal deposit contribution of 5% required which is based on the discounted purchase price.

The discount provided is not yours to keep as this discount is intended to be passed on to whoever occupies the property.

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Income Protection

Help to Buy/Lifetime ISA

The Help to Buy ISA was a government backed scheme to assist buyers with the cost of buying a property. You can no longer apply for a new Help to Buy ISA, however if you opened an account before the scheme expired you may still be able to benefit from the bonus. This scheme has now been replaced with the Lifetime ISA.

If you have an eligible Help to Buy ISA account and have met the criteria, during the sale process your solicitor can claim a 25% bonus based on the balance of your account up to a maximum of £3000 which will be available on completion which cannot be used towards your deposit as such but help to recover buying costs.

If you have opened a Lifetime ISA there are some differences including an increased yearly contribution limit, an uplift to the maximum property value anywhere in the UK, the bonuses you receive are paid monthly and funds available on exchange of contracts which would be able to be used as part of your deposit.

These ISA accounts and the bonuses they attract can be used in conjunction with other schemes if you meet the criteria.

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Income Protection Insurance

What is

Shared Ownership

The Shared Ownership Scheme is available in England, Scotland, Wales and Northern Ireland however the schemes differ in each government. This scheme is available for both new build properties and resale properties and is not just limited to First Time Buyers however there are conditions to be met for Home Movers.

If you can’t quite afford to buy a property, whether that be because your deposit is not yet high enough or you cannot quite afford the Mortgage required for a standard property purchase, the Shared Ownership scheme offers you the chance to buy a share of your home (Usually between 25% and 75% of the home’s value) and pay rent on the remaining share. Later, you could buy bigger shares when you can afford to. Rental payments increase each year by the Retail Price index inflation rate plus an uplift typically between 0.5% and 2% depending on the terms explained in your lease.

Shared Ownership properties are always Leasehold properties until you have acquired 100% of the property, leasehold properties attract ground rent and service charges which will be taken into considering within the affordability assessment for your Mortgage alongside the rent on the remainder of the property.

There are some Mortgage providers that can accept as little as 5% deposit depending on the property type, this percentage is based on the value of your share for example, if the full market value of the property was £200,000 and you purchased a 25% share, your deposit would equate to £2500 as this is 5% of the 25% share (£50,000).

Should your circumstances improve, and you wish to purchase additional shares, this is called “Staircasing”. If you want to Staircase the property must be revalued to calculate the cost of any additional share purchased. This is something you will have to pay for and must be completed by a Surveyor registered with RICS (Royal Institution of Chartered Surveyors). Staircasing will attract legal fees due to the way your Property Deeds require amending.

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Income Protection

Right to Buy/Right to Acquire

If you are a Council or Housing Association Tenant, you may be eligible for the Right to Buy/Right to Acquire. This is generally depending on the length of your tenancy amongst other conditions. The Right to Buy/Right to Acquire is where your landlord allows you to buy the property you rent for a discounted price. These schemes are available in England, Wales, Scotland and Northern Ireland (Different rules apply).

The discount for the Right to Buy can go up to £84,600 across England and £112,800 in London boroughs, subject to the length of tenancy. The discount can act as your deposit, therefore, could result in there not being a requirement for any personal deposit contribution.

The discount for the Right to acquire is between £9,000 and £16,000 of the property value.

The discounts can play a major part in the overall affordability making homeownership possible for those that may have been limited to what they could borrow or the level of personal savings.

There are conditions like the Help to Buy schemes whereby should you sell the property within a certain timeframe the discount provided may need to be paid back. This will be clearly outlined within the legal process.

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My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.

King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.

The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

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      Regional Price Limits

      There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.

      • East - £407,400
      • East Midlands - £261,900
      • London - £600,000
      • North East - £186,100
      • North West - £224,400
      • South East - £437,000
      • South West - £349,000
      • West Midlands - £255,600
      • Yorkshire and the Humber - £228,100