There are a variety of schemes available to enable households to purchase a share of property:
Help to Buy
The Help to Buy scheme is made up of two elements and will replace FirstBuy and Homebuy Direct:
- An 'equity loan' where the Government will lend buyers between 10% to 20% of the value of a new build home
- A 'mortgage guarantee' which will incentivise lenders to make more mortgages available for people with small deposits. This part of the scheme will not be available until 2014.
Please see the Help to Buy website (external link) for more information.
Under this scheme homes are available through different housing associations. You can buy shares worth between 25% and 75% of the property's market value and you pay a subsidised rent on the remaining share. You may need to raise a mortgage to purchase your share. If you have a large deposit or equity from the sale of a property, this can also be used towards purchasing your share. For more information visit the Help to Buy website (external link).
Shared ownership opportunities are currently available in Maresfield, Hailsham, Stone Cross, Uckfield, Crowborough, Polegate and Hellingly, please visit the Help to Buy website (external link).
What is the Local Authority Mortgage Scheme?
The Local Authority Mortgage Scheme aims to help suitable first time buyers by allowing them to access 95 per cent mortgages. It is only for existing properties and not newly built homes. It cannot be used for buy to let properties.
How does it work?
The scheme in Wealden will be offered in partnership with a number of mortgage lenders. Potential buyers will need to meet the chosen lender's strict credit requirements and the councils criteria on maximum loan size. An indemnity would be provided by the Council to the lender to reduce the typical deposit requirement, in some cases from 25 per cent to five per cent. The potential buyer would get a 95 per cent mortgage on similar terms to a 75 per cent mortgage. The indemnity would be for the first five years, when there is most risk of repossession. The Scheme is only open to first time buyers. All mortgages are repayment mortgages.
A normal mortgage would be:
Purchase Price: £250,000
25 per cent deposit: £62,500
Under the Local Authority Mortgage Scheme:
Purchase Price: £250,000
Buyers 5 per cent deposit: £12,500
Council deposit: £50,000
When will the scheme begin?
The scheme will be available later in 2013 subject to Full Council approving the expenditure and officers establishing the scheme with East Sussex County Council and Sector Treasury Services.
How much can people borrow?
Subject to lenders' usual lending criteria, borrowers are able to select any existing property in the Wealden area up to a maximum loan of £250,000. First time buyers will put down five per cent of the property price, and Wealden District Council will provide a cash backed indemnity of up to 20 per cent as additional security. The first time buyer owns the property in its entirety and will have access to a range of products at a lower rate of interest than would normally be available for this level of deposit.
Do you have to live in Wealden already to qualify?
No but the property you intend to buy has to be within an eligible Wealden postcode.
How do I apply?
Details will be announced when the Scheme is ready to start. How many people will the scheme support?
This will depend on the details of each application, but it is hoped that the scheme will enable around 40 buyers to enter the housing market when they would have been otherwise unable to do so.
Why is the Council supporting the scheme?
The Local Authority Mortgage Scheme recognises that peoples ability to buy their first home is essential to retaining individuals with key economic skills and experience within the district. The current preference for low loan to value mortgages as a result of the recession is expected to continue and therefore the council, along with a number of other local authorities, is taking a proactive approach in supporting our local area. The money invested in the scheme will be paid back to the Council at the end of the agreement, along with any interest accrued, although this is subject to any charges relating to defaults on any mortgage within the scheme. With lenders applying the usual robust credit checks and the wider experience of schemes elsewhere this represents a relatively low risk to the council.
Are there any other schemes available to help first time buyers?
A number of schemes are now in place to support first time buyers including equity loans and shared ownership schemes and schemes enabling access to 5 per cent loans on new build properties. Another government backed scheme called 'The New Buy Scheme' also exists, enabling buyers to access five per cent loans on new build properties across England and Wales.