With economic conditions the way they currently are, combined with very high property prices, it can be hard for first-time buyers to get the mortgage they need to buy their dream home. The lender – whether it be a bank or other financial institution – will invariably expect the applicant to have saved a substantial amount for the down payment, a required deposit. Luckily, for those who can fulfill a few requirements, the government is ready to lend a helping hand. How does the government do this? Here’s a close look at some government schemes to help you buy your dream home.
The equity loan
In this scheme, the government will help you with 20% of the value of the property in the form of an equity loan. You’ll have to make a deposit of 5% and secure a mortgage to cover 75% of the value of the property. It’s only open to property valued under £600,000. It’s an expansion of the first buy scheme. No salary cap or joint income limit is applied.
The mortgage guarantee
This is excellent for those who want to apply for a mortgage but have trouble coming up with the required deposit; the government guarantees the mortgage for all types of properties (provided they are valued at under £600,000) and you have to put down only 5% of the value as deposit yourself. It’s applicable to both first-time owners and those who already own property themselves.
Shared ownership is, like the name suggests, a scheme in which you own the property – but only part of it; you share ownership with the government and pay rent in return until you can buy your own share back. This buying back can happen in increments and once all the money is paid, you do, in fact, already own the whole property. There are two versions – those for newly built and those for resale.
There are many other schemes, each for their unique purpose. For example, the Armed Forces Home Ownership Scheme focuses on employees of the armed forces, whilst the HOLD scheme (Home Ownership for People with Long term Disabilities) pays attention to disabled people.
The reason why government schemes like these exist is not only to help individuals accomplish their goals for humanitarian reasons; there are some very good economic reasons as well – the more people can call themselves homeowners, the larger the middle class becomes, the stronger the nation is. It’s about creating social and economic stability. For many, this is a dream come true – many can now buy the right home for the right price, thanks to the government schemes in place. And if you need additional assistance, mortgage brokers for Colchester (and the surrounding areas) from Flagstone.co.uk are always available to help.