There are several Government and local authority schemes available that have been set up to make buying a home more achievable for hard working families who are struggling to get on the property ladder.

Help to Buy – Equity Loan

The Government’s equity loan scheme is designed to help people get mortgages for new-build homes, up to the value of £600,000 with a 5% deposit.

If you save 5% of the value of a home, the Government will provide you with a term loan to cover up to a further 20% of the property’s value, meaning you will only then need a mortgage to cover the remaining 75%.

There are no fees payable for this Government loan for the first five years, but in the sixth year a charge of 1.75% will be applied. This fee will then increase annually, in line with the Retail Price Index plus a further 1%.

A condition of this arrangement is that the buyer must then live in this property rather than sub-let it to a tenant or tenants. It must also be the buyer’s only property.

For more information, please see the equity loans section of the Government’s Help to Buy website.

Help to Buy: Mortgage Guarantee

The Government’s mortgage guarantee scheme is for first time buyers and home movers and helps buyers get a mortgage with only a 5% deposit.

As with the equity loan scheme, the property can cost up to £600,000 and must be the buyer’s only property and not rented out. Unlike the equity loan scheme, the mortgage guarantee scheme applies to the purchase of both new-build and pre-owned properties.

In this arrangement the Government provides the guarantee to the lender, and takes on the risk by underwriting up to 15% of the property’s value. This means that the mortgage will be like a regular mortgage in many respects and before it is approved you will be assessed for affordability to make sure you are able to comfortably make the repayments.

For more information, please see the mortgage guarantees section of the Government’s Help to Buy website.

Shared Ownership

Shared ownership schemes give buyers the opportunity to buy part of the property from the owner, and pay a reduced rent on whatever is outstanding.

Under this scheme, the buyer will usually buy between 25% and 75% of the property, leaving the Landlord, usually the local authority or a housing association, to own and collect rent on the rest. The owner’s monthly payment will partly cover this rent and partly go towards the mortgage taken out to buy their share in the property.

Over time, the buyer can purchase a larger share of the property from the Landlord until they own it outright. At this point they will continue to pay off the mortgage, but will no longer pay any rent.

These schemes have strict eligibility criteria, and are designed to benefit first-time buyers looking for newly-built homes.

Find out how much you can spend

Many people start looking for a property (sometimes they find one too) without really knowing their budget. Having a rough idea is fine, but it’s important to work out exactly how much you can afford. There are a number of ways to get a mortgage. The simplest is to speak to your high street bank. They will know your financial history, your current outgoings, and will be able to offer you their exclusive products. However, there are some real advantages to speaking with a mortgage broker. They are independent and not tied to any particular lender or product. This may be to your advantage, as having ‘whole of market’ choice will give you access to all the products from every lender. Although most financial advisors and brokers charge a fee, quite often this additional cost will be tiny in comparison to the savings that can be made over the term of the mortgage product. Our preferred mortgage broker is Heron Financial. They offer a personal approach to mortgage and insurance advice.