LEGAL
Alternatives to Help to Buy What are the options left for first time buyers now the Help to Buy scheme is closing? Lesley Price FCILEx of CGM Hampshire Limited explains more 1. FIRST HOMES SCHEME If you’re a first time buyer, you may be able buy a home for 30% to 50% less than its market value. This offer is called the First Homes scheme and is only currently available in England. The home can be: 9 A new home built by a developer 9 A home you buy from someone else who originally bought it as part of the scheme The homes cannot cost more than £420,000 in London, or £250,000 anywhere else in England, after the First Homes discount has been applied
2. SHARED OWNERSHIP A landlord, usually a Housing Association (HA) or other Registered Social Landlord (RSL) will sell a percentage share of a property to a purchaser and retain the remaining share. A housing association will grant you a lease (either 125 or 250 years) to the purchaser. In return, the purchaser pays a premium, which is a percentage of the market value of the leasehold interest and rent on the remaining share. A key feature of a shared ownership lease is the right for you as tenant to purchase additional shares until eventually you own 100% of the property.
3. SHARED EQUITY SCHEMES In this scheme, the developer lends you up to 20% of the cost of a newly built home. This will be secured as a Second Charge (mortgage) on your home and does not have to be repaid if you sell your home on under the scheme at a later date, but the new buyer takes on the discount charge.
4. RIGHT TO BUY Right to Buy allows most council tenants to buy their council home at a discount. You can apply to buy your council home if: 9 It’s your only or main home
9 It’s self-contained 9 You’re a secure tenant Most housing association tenants do not have the Right to Buy. But if you were a secure council tenant and were living in your home when it was transferred from your council to another landlord, like a housing association, then you may have a “Preserved” Right to Buy.
5. FIRST TIME BUYER MORTGAGES Many lenders offer mortgages exclusively to first time buyers and they are generally available with higher loan-to-values. This means you may only need a deposit of 5% or 10% of the property’s value. First time buyer mortgages are only available from certain lenders so it does limit the number of products that will be available to you.
6. FAMILY MORTGAGES Parents, or other family members, sometimes help their children to buy a first home. Guarantor mortgages allow a parent or close family member to stand as guarantor on the mortgage. This means they are putting their name to the mortgage and may
be liable for any shortfall if your property gets repossessed and subsequently sold. Some lenders also offer family springboard mortgages. These are home loans where a family member uses their own home or savings as security. They do, however, also bear responsibility for any missed payments.
7. THE MORTGAGE GUARANTEE SCHEME The Mortgage Guarantee Scheme aims to increase the number of 95% mortgages available to buyers with a 5% deposit. The Government-backed scheme is designed to protect lenders offering these loans from potential losses: 9 Mortgages under the scheme are only available on primary residences. This means they can’t be used on a buy-tolet property or second home 9 The maximum value of the property is £600,000 For all these schemes, you will need a mortgage broker and a conveyancer who specialise in this sector to assist you with looking at all the options to find the one that is right for you. For more information or a no-obligation quotation please contact us at enquiries@c-g-m.co.uk
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