Affordable Homes Schemes and Shared Ownership.

More and more people are turning to Affordable Homes Schemes or Shared Ownership Schemes, but what are they, how do they work and what should you be aware of?

In this guide we explore the benefits and the pitfalls of entering into the different schemes.

Each country within the UK has its own scheme. (Links to each are at the foot of this page)

The types of schemes available to you are-

1 Help to Buy - loans - details available via our page on the government's help to buy scheme

2 Mortgage Guarantees - set up to allow you to buy a home up to the value of £600,000 with a deposit of 5%.

Available to both first time buyers and those looking to move, this scheme cannot be used in conjunction with a shared ownership or shared equity scheme, and the new home must be your main residence.

The good thing about this scheme is that the property does not have to be a new build, but your loan must be a repayment style mortgage.

Lots of lenders are part of this scheme; your estate agent or broker will be able to give you advice on this. The Government will provide a guarantee to the lender up to 15% of the value of the property; the guarantee will cost the lender so you may find that the interest rates being offered are not as good as those outside of the scheme.

Why do this? The scheme has been introduced to help people move, those who can afford the mortgage but cannot save the deposit; lenders are looking for much larger deposits nowadays and as a consequence people are finding it harder to qualify.

Critics of the scheme say that the government help to buy scheme fuels the property market and encourages indebtedness.

3 Shared Ownership Schemes.

Provided via Housing associations they allow you to take out a loan for a property between 25 and 75% of the property value; the remainder of the property is owned by the housing association on which you will pay rent.

If you can afford to, you can buy out the housing association at a later stage.

The criteria.

Your earnings must be under £60,000 per annum. (£66,000 in London)

The property you wish to buy must be leasehold, and one offered via the housing association.

The Housing Association will have priority groups for those wishing to buy through the scheme; they will typically include council tenants and armed forces personnel.

If you would like to apply for the scheme, you will need to contact a help to buy agent, in the location in which you wish to buy - Help to buy
agent

In addition to the standard scheme, help is also available to people aged 55 and over, but some details differ.

If you are looking for help, and you suffer with a long - term disability, speak to your local agent about special consideration available to you.

Points to be aware of-

When you come to sell the property, if you do not own 100% of the property it will need to be offered back for resale through the Housing Association for a period of time, you will also need to use their accredited values.

If you do own 100% of the property, the Housing Association must be givenfirst refusal to purchase the property.

Our advice is to get a solicitor to check and explain to you the terms of agreement with the housing association.

4 NewBuy.

This scheme relates only to new build homes, and lets you buy with a deposit of only 5%.

NewBuy criteria-

The criteria for the property.

- It must be a property offered to the market for the first time, e.g. new build or property converted into flats.

- Under £500,000

- Main residence

- Cannot be used in conjunction to any other scheme

- The builder must be a member of the NewBuy scheme

Your criteria

- Available wherever you are on the property ladder.

- No restrictions on income

If you are interested in this scheme speak to a mortgage adviser first as you may find the rates as not as good as those available outside of the NewBuy scheme.

The other downside is you will only have a small proportion of the housing market to choose a home from.

When you are looking to buy a property, start planning early to satisfy the mortgage lending criteria, take advice from professionals and understand all the costs involved.