#government mortgage help
Government schemes for first-time home buyers and existing homeowners
There are a number of government schemes to help you buy a home such as Help to Buy, Right to Buy, Shared Ownership, and more. Find out more about these affordable housing schemes and how to apply.
Help to Buy
Help to Buy is a government scheme for those who have a small deposit, when buying a home. Have you at least a 5% deposit? If so, you could use the Help to Buy scheme through:
- Equity loans – available to first-time buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000.
Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have a 5% deposit.
If you live in London, you can borrow up to 40% of the purchase price.
The scheme is available until 2021.
- Mortgage guarantees – available for new and old properties across the UK. The government undertakes to cover any of your mortgage lender’s losses as a result of any problems you might have in paying it back. However, you are still responsible for keeping up your mortgage repayments on a Help to Buy scheme in exactly the same way as any other mortgage.
The scheme is open until 31 December 2016.
With both schemes there are limits on the cost of the property you buy. These limits differ across the UK.
Right to Buy/Right to Acquire
Right to Buy is for tenants in England, Wales and Northern Ireland who rent their home from their local council. It allows tenants, who qualify, to buy their home at a discount. The size of the discount varies depending on where you live and the type of property you want to buy.
Tenants who were living in council homes before it transferred to another landlord such as a housing association, may be eligible to buy their home under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
In most cases, tenants will need to have rented from the public sector (i.e. local council or housing association) for three years before they can buy under these schemes.
The three years can be non-consecutive, so tenants who have rented from the private sector in the middle of a total of three years renting from the public sector, can still qualify.
In 2016, the Right to Buy scheme is getting extended to include housing association tenants in England.
This extension is starting out with a small number of housing associations in certain areas. It will then be rolled to the rest of England over the year. For more information, visit the Right to Buy website .
In Scotland. the Scottish Government plans to end the scheme for all council and housing association tenants in Scotland, but there are other schemes available .
Right to Acquire is a scheme offered in England and Wales for housing association tenants who don’t qualify for Right to Buy. The discounts are slightly smaller.
In Northern Ireland this scheme is called the House sales scheme and is for tenants who rent from the Northern Ireland Housing Executive or a housing association. Find out more on the nidirect website .
Shared ownership is where you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remaining share.
You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the home’s full value. You then pay a reduced rent on the share you don’t own and you have the option later on to buy a bigger share in the property up to 100% of its value.
The eligibility restrictions on the shared ownership have lifted. So, from April 2016 anyone who has a household income of less than £80,000 (outside London) or £90,000 (inside London) can buy a home through shared ownership.
Only military personnel will be given be priority over other groups. The scheme will apply across England.
Co-Ownership in Northern Ireland
This scheme is exclusive to Northern Ireland and is available for both newly built and older homes. You buy between 50% and 90% of the property (known as the ‘starter share’) and can increase that share at any time (known as ‘staircasing’). You pay rent on the portion you don’t own.
First Steps London
This scheme aims to help low and modest income earners buy or rent at a price that’s affordable. You part buy and part rent the property – mostly for newly-built homes but some resale properties are included. There are eligibility criteria around earnings and you can’t buy a home on the open market.
If you’re looking in London, find out more on the First Steps website .
Shared equity schemes
The Help to Buy equity loan scheme is a government scheme currently set to run until 2020. It’s available to first-time buyers as well as homeowners looking to move – but only for newly built homes.
Scotland has two shared equity schemes – New Supply Shared Equity and Open Market Shared Equity.
The Homebuy scheme offers help by providing an equity loan (30% increasing to 50% of the purchase price), and is designed for people who would otherwise need social housing. The loan can be repaid at any time before the property is sold, but if you sell the property then it must be repaid at that point.
Find out more about Welsh home buying schemes at the Wales Government site .
There’s an Equity sharing scheme in Northern Ireland where you can buy a property, often at a discount, with a housing association or the Northern Ireland Housing Executive (NIHE).
Starter Home scheme
The Starter Home scheme is a new government plan where 200,000 new build homes are available to first-time buyers under 40 years old with a minimum of 20% off the market price.
The discounted price for these homes should be priced no more than £250,000 outside London, and £450,000 in London.
For more information about the homes available in this scheme, visit the New Homes website .
Use the Mortgage payments calculator to estimate the monthly interest and repayment amount.
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