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Home Ownership Schemes

There are various types of Help to Buy scheme that offer financial help available to people who live in England and are unable to afford to buy a home on their own.  There are also schemes available to people who live in Wales and Scotland, but these schemes are different.

The 4 types of scheme available are:

  1. Help to Buy equity loans
  2. Shared Ownership
  3. New Buy

We’ve covered some of the key points that you may wish to know about these schemes, however if you have any further questions, please do not hesitate to contact us.

1. Help to Buy equity loan

These loans are available to both first time buyers and home movers, but are only available on newly built homes.  There is also a maximum property value of £600,000 stipulated by this scheme.  If you decided to use this scheme, you will be unable to sub let your home at any time.

How does the scheme work?

  • Deposit -you need to contribute a minimum of 5% of the property price as a deposit
  • Government loan – a maximum loan of 20% of the price will be gifted by the government
  • Mortgage – a mortgage of up to 75% of the property value will need to be secured to cover the rest

Example

For a property worth £200,000

Amount

Percentage

Cash deposit

£10,000

5%

Equity loan

£40,000

20%

Your mortgage

£150,000

75%

 

If you decide to sell the property and it has grown in value, the amount it has increased will be proportioned out.  For example, if the home in the table above sold for £210,000, you would get £168,000 (80%, from your mortgage and the cash deposit) and pay back £42,000 on the loan (20%).  You would need to pay off your mortgage with your share of the money.

Equity loan fees

During the first 5 years of owning your home, you will not be charged any loan fees.  During the 6th year, a fee of 1.75% of the loan value will be charged.  Each year after this the fee will increase.  The increase will be worked out using the Retail Prices Index plus 1%.  Before the fees start, your help to buy agent will contact you to arrange setting up monthly payments with your bank.  Each year, you will be sent a statement with details about the loan.  It is important to note that the fees that become payable from the 6th year onwards, do not count towards paying back the equity loan.

Applying for an equity loan

Come in and speak to one of our advisers to find out how what mortgage amount you will be able to borrow from a mortgage lender.

Once you know what can be borrowed, contact the Help to Buy agent in the area that you want to live in (for Dorset, the agent is southwesthomes.org.uk), if you’d like to buy a home with an equity loan. 

The property must be purchased from a registered Help to Buy builder.  The Help to Buy agent should be able to supply you with a list of registered builders for you to choose from.

Selling your home and paying back the loan

You are able to sell the home at any time as it is in your name.  The loan must be repaid either when you sell your home or at the end of your mortgage period – whichever comes first. 

There is also the option for you to pay back some of the loan without having to sell your home.  You are able to pay back either 10% or 20% or the total amount, at long as the loan is worth at least 10% of the value of your home.

You can speak to your mortgage lender and help to buy agent if you want to pay the loan back in full at any time.

2. Shared ownership schemes

Housing associations provide shared ownership schemes.  Shared ownership schemes operate by you purchasing a share of your home (anywhere between 25% and 75% of the home’s value) and rent is then paid on the remaining share. 

Shared ownership properties are always leasehold.  You would need to obtain a mortgage to pay for your share of the property purchase price.

Eligibility

  • Income – your household must earn less than £60,000 a year
  • Home ownership status – you must be a first buyer (or, if you have previously owned a home but can’t afford to buy one now, you may be eligible)
  • Residential status – you rent a council or housing association property

Older people

There is a ‘Older People’s Shared Ownership’ Help to Buy scheme which is available to people aged 55 or over.  This scheme operates in the same way as the standard shared ownership scheme, but the main difference is that you can only buy up to 75% of your home.  Once you own 75%, you will not have pay rent on the remaining share.  For more information about this scheme, the local Help to Buy agent will be able to help you.

Buying more shares

There is an option for those that own a shared ownership home, to buy more shares, which is known as staircasing.

The cost of purchasing more shares will very much depend on the value of your property at the time you wish to purchase the share.  So, if property prices have gone up, you’ll pay more than for your first share.  If the property value has decreased, then the new share will be cheaper.

You will need to contact the housing association, who will then arrange for a valuation of the property.  They will then let you know the cost of your new share.  Please note that you will have to pay the fee for the valuation that takes place.

Selling your home

You can sell the property yourself if you own 100% of your home.  However, when you put it up for sale, the housing association has ‘first refusal’ and has this right to buy the property for 21 years after you fully own the home.

If you want to sell your property and you own a share of it, the housing association has the right to find a buyer for it.

Applying for a shared ownership scheme

Come in and speak to one of our advisers to find out how much you would be able to borrow from participating lenders. 

3. New Buy

The New Buy scheme allows you to buy a newly built home with a deposit of only 5% of the purchase price.

Eligibility

  • Property type – the property must be a new build – being sold for the first time or for the first time in its current form (e.g. a new flat that used to be part of a house)
  • Property price – must be £500,000 or less
  • Main residence – the property must be your main home.  You cannot use the New Buy scheme to buy a second home or a buy-to-let property
  • Ownership – the property must be fully owned by you.  You cannot use the New Buy scheme for shared ownership or shared equity purchases.
  • Builder – the property must have been built by a builder who is participating in the New Buy scheme
  • Citizenship – you must be a UK citizen or someone with the right to remain indefinitely in the UK
  • Home ownership status – you don’t have to be a first time buyer
  • Income – there is no limit on your level of income

Please note that you can’t use New Buy with any other publicly funded mortgage scheme.

How to apply

Come in and speak to one of our advisers to find out how much you would be able to borrow from the lenders that are currently participating in the scheme.

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  • Pensions

    Pensions+

    Whether you're saving for retirement or you are facing decisions at retirement, we can help

    View more
  • Savings Planning

    Savings+Planning

    Saving for the future is important and we can help you select the right product to achieve your goals

    View more
  • Mortgage Advice

    Mortgage+Advice

    We are specialists in arranging mortgages for First Time Buyers, people moving home, 'Buy to Let' mortgages and remortgages.

    View more
  • Investment Advice

    Investment+Advice

    Make the most of your money and don't leave it languishing in Building Society accounts

    View more
  • Equity Release

    Equity+Release

    Allows you to access cash tied up in your home - speak to one of our qualified advisers

    View more
  • Protect Insure

    Protect+Insure

    We can shop around for the lowest cost life cover, income protection and critical illness cover

    View more