If you are a first time home buyer there is good news. You may be eligible for a relatively new type of mortgage called a shared equity mortgage. The government has worked with lenders to help first time buyers and lower income families to be able to buy a home in this competitive market. With the rise in the price of buying a home in the past recent years, many find it hard to afford the mortgage payments or even raise the money needed for a down payment. Shared equity loans solve that problem by enabling a buyer to purchase as little as 70% of the home and the other 30% will be bought by either a lender or the government.
Not Shared Ownership
This mortgage is not to be confused with the shared ownership mortgage where the government or lender sells a tenant pieces of the house in 25% increments while they are paying rent. Instead, with the Shared Equity Mortgage, the government or lender keeps their part ownership of the property until it is sold. It then makes part of the profit as well.
Who Qualifies?
Families or individuals with a total household income of £60,000 or less per year may be eligible for a Shared Equity mortgage. An affordability check will be performed on the applicants to see how much of a mortgage they can afford to pay. If they are approved, applicants may choose one of the offered properties from the lender or government.
How to Apply
This scheme is designed by HomeBuy Direct. They have a list of 15 agents approved to deal with applicants to get them into their new home. First time buyers interested in applying for a shared equity mortgage through HomeBuy Direct must first contact one of these regional lenders.
For a list of lenders in your area go here:
http://www.homesandcommunities.co.uk/homebuy_agents
A Shared Equity Mortgage may be what you need. There are no fees for the first five years of the mortgage and you may buy the remaining equity in installments, if you can afford to at the current market rate. The Homes and Communities Agency have over £300 million worth in property and over 100,000 properties available for approved applicants to buy. |
