Affordable home ownership
Help to Buy and affordable home ownership schemes (also known as low cost home ownership) are to provide financial assistance to first-time buyers and home movers who want to buy a home and live in England. Help to Buy is the government’s home ownership scheme and products available include mortgage guarantee, equity loan and shared ownership.
Help to Buy
Help to Buy is a government scheme which aims to address the lack of mortgage finance in the market and increase housing supply by increasing effective demand. You may be able to get financial help though a government home ownership scheme of you live in England and can’t afford to buy a home.
The three types of home ownership schemes under Help to Buy are:
- Equity loan
- Mortgage guarantee
- Shared ownership
How does it work?
- you will need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 20% of the price
- you will need a mortgage of up to 75% to cover the rest
- you won’t be charged loan fees on the 20% loan for the first five years of owning your home
- you must pay back the loan after 25 years or when you sell your home – whichever is earliest. How much you pay back will depend on the market value at that time
- you can pay back all of your loan at any time
Who is eligible?
- equity loans are open to both first-time buyers and home owners on new-build homes in England with a purchase price of up to £600,000
- you won’t be able to sub-let the home or enter a part exchange deal on your old home
- you must not own any other property at the time you buy your new home
How to apply
- the equity loan scheme is run by government appointed Help to Buy agents. They can guide you through your purchase, from providing general information about the scheme to dealing with your application.
How does it work?
- shared ownership schemes (part buy/part rent) are provided through housing associations. You buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share
- you can buy bigger shares at a later stage when you can afford to, of up to 100% (full ownership) except in some rural areas
- you can buy a new build or an existing property through resale programmes from housing associations
- you will need to take out a mortgage to pay for your share of the homes purchase price, or fund this through your savings
- priority is given to people who rent a council or housing association property and Armed Forces personnel
Who is eligible?
- your household earns £60,000 a year or less
- you are a first time buyer (or used to own a home but can’t afford to buy one now)
- some shared ownership schemes within South Gloucestershire will give priority consideration to residents of Bristol and South Gloucestershire
- some shared ownership schemes in South Gloucestershire Council have specific eligibility criteria, for example people purchasing shared ownership homes within ExtraCare schemes may be required to have identified care needs that can be appropriately met by the ExtraCare housing scheme
Home ownership for people with long-term disabilities (HOLD)
- HOLD can help you to buy any home that’s for sale on a shared ownership basis if you have a long-term disability
- you can only apply for HOLD if the properties available through the other home ownership schemes don’t meet your needs, e.g. you need a ground-floor property
Older peoples shared ownership
- this works in the same way as the general shared ownership scheme, but you can only buy up to 75% of your home, once you own 75% you won’t have to pay rent on the remaining share
- you must be aged 55 or over
How to apply for shared ownership schemes
- to buy a home in South Gloucestershire through a shared ownership scheme contact:
Other affordable home ownership schemes
Preserved Right to Buy
- if you were a secure council tenant and were living in your home when it was transferred from the council to another landlord, like a housing association, you may have the ‘Preserved’ Right to Buy. Your landlord will be able to tell you if you have the Preserved Right to Buy
Right to Acquire
- allows most housing association tenants to buy their home at a discount (dependent by area) and applies only to properties funded since 1996. You can apply to buy your home if you have lived there for three years, it is self-contained, and is your only or main home. Your landlord will be able to tell you if you have the Right to Acquire
- this initiative aims to help young first time buyers (below 40 years) to purchase a home with a minimum 20% discount off the market price. Aspiring homeowners can sign-up at new-homes.co.uk/starter-homes/ to receive updates as homes become available
- you can buy a share of your housing association home and pay rent on the rest of it. You get a discount on the value of your home depending on your area and the share you’re buying. You can buy more shares in the property until you own 100%. Check with your housing association to see if your home is eligible
Help to buy ISA
- if you want to buy your first home you can open an ISA with a bank and the government will add 25% bonus on top. The minimum you need to save to get the bonus is £1,600 (a £400 bonus) and the maximum the government will contribute is £3000.00. You will also get the banks rate of interest paid on top. This scheme will be open from Autumn 2015. Once you have opened the ISA you can keep paying into it for as long as you like. The maximum you can pay each month is £200. You can transfer between different Help to Buy ISAs to get the best interest rate. You can’t contribute to a cash ISA and a Help to Buy Isa in the same tax year. The bonus will be calculated (on the amount you have in the ISA) and paid when you buy your first home, you will get a voucher which will go straight to your mortgage lender. Each first-time buyer can open a Help to Buy ISA. The bonus from the government will be paid on the amount you have in the ISA to the when you buy a property.