Home & Automotive

Helping You to Buy Your New Home

One of the most important life challenges most of us experience is how to buy a new home. Like many, trying to obtain a mortgage with so many hoops to go through is near impossible to get somewhat close to getting one.

I am going to explain about shared ownership, this you may of herd about as its been around for quite sometime but in very recent years this has become more interesting, ”I hear you say why”

Over the past few years and happening now there has been a sharp rise in New Housing Developments pretty much going up everywhere but what is positive is when developers acquire planning permission, usually around 40% HAVE to be affordable housing.

Some developers who can not sell their properties actually turn to this solution in order to get homes sold.

One of the main changes in the past 20 years, more opportunities to a brand new home right in the very area you want to stay living in.

How Does It Work…

You can normally choose to buy a percentage of the total cost which usually is anything from 25% to 75% which this is the part you would need to seek a mortgage on, but don’t worry as you wont be borrowing no where near as much as if you were buying the whole property.

Shared ownership homes are provided through a housing association. They work by offering first-time buyers a share of the property ownership.

You can buy a share of between 25% and 75%, and then pay rent on the remaining share.

The shared ownership scheme is only open to first-time buyers, or those who used to own a home but can’t afford one anymore.

Though the government has announced that as of April 2016 the scheme will be open to any household with an annual income of less than £80,000 (£90,000 in London).

Shared Ownership is mainly aimed at first-time buyers, although previous home-owners may be eligible and there is a scheme for those who are over 55. There are certain criteria that applicants must meet to qualify for the Shared Ownership scheme, and these vary across the UK.

In England, you may be able to enter into the Shared Ownership scheme if:

  • You’re aged 18 or over
  • You’re a first-time buyer or you cannot afford to buy a property (even if you previously owned one)
  • Your household income is less than £80,000, or less than £90,000 if you live in London
  • You rent a council or housing association property
  • You are not in mortgage or rent arrears
  • You have a good credit history.

If you are interested in Shared Ownership and you would like to find out if you are eligible, you simply need to speak to your local council or housing association. It does not matter what your profession is, although priority will be given to armed forces personnel.

If you are told that you are eligible, you will then need to find out if you can get a mortgage (unless you do not require a mortgage). Some lenders do not offer mortgages to people entering in a Shared Ownership scheme, and all lenders will want to carry out financial checks.

Is Shared Ownership the Same as Help to Buy?

No, Shared Ownership and the ‘Help to Buy’ scheme are not the same thing. With Help to Buy, the government provides a loan to help you with the deposit for a property. This loan is interest-free for the first five years.

With Shared Ownership, you are expected to find the money for your deposit. However, the deposit will only be in relation to your share of the property. This means that the deposit will be smaller than if you were buying the property entirely on your own.

So lets say you have seen a new home that you have fallen in love with for £400,000 and you choose to buy 30% of this amount which would be £120,000 (phew, sounds better!) which would then leave an amount of £280,000 which the scheme owns which you would pay rent for this amount.

based on a 5% deposit means you’ll only need £15,000 for a property valued at £300,000, and considering you’ll be buying a share, rather than the whole property you can get away with putting up less.

For example, for a 50% share in a property valued at £300,000, you’ll need a deposit of £7,500.

The interesting part is that at a later date you can buy more of the property which is called stair-casing which will allow you to fully own your new home.

If in your life that you receive any upfront lump sums like inheritance or gift, my advice is to put it into property and if you like this, you can invest it into this scheme and have no mortgage.

Developers can advertise this on the likes of property giant Rightmove but it worth contacting your local council as they generally run or connected to these schemes.

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