Alternative Ways To Get On The Housing Ladder – Part Two
Posted on October 30th, 2011
In Part One of our guide we examined several options one might consider when trying to get onto the first rung of the housing ladder. These included property auctions, joint mortgages and parental help. In this article well examine some more options which might just help you own a property.
Shared Ownership
In Part One we looked at owning a property with friends in a 50/50 financial arrangement but shared ownership in this context is different. A shared ownership scheme will be run by a local Housing Association. The idea is that the purchaser will be buying a property from the Housing Association stock and will buy from between a 25% to 75% share of the house and then pay rent on the rest.
The outstanding balance (on which you are paying rent) can then be paid off in stages. There are various qualifications to this scheme depending on where you live, but its still fairly inclusive. Youll have to be a first time buyer or a key worker (police, nurse, etc), a current council tenant and usually have a combined household income of less then £60,000.
Housing Association low-fee loans are also available which can help buyers obtain a mortgage which could result in a lower interest rate or up front fees. Be aware though that if you sell the property in future the loan will have to be repaid as a a proportion of the sale price. If the original loan was 20% of the purchase price, you will repay 20% of the sale price.
Right To Buy
Right To Buy is a scheme that has long been available to council house tenants in England & Wales and will enable prospective buyers to get a substantial discount (of between £16,000 and £38,000 depending on location and house type) if they have lived in the same property for at least 5 years.
You will still need to apply for a regular mortgage but with the discount it should be easier. Again, if you want to sell the property at some point in the future, some or all of the discount will have to repaid to the local authority.
Rent To Buy
Rent To Buy is a scheme operated by many local Housing Associations in which a new home from the Housing Association stock can be rented for 80% of the open market rent. However the rest of the money must be saved towards the cost of buying a shared ownership property.
Some Housing Associations will require a rental tie-in of up to five years before the prospective owner can apply for the shared ownership scheme.
Developers Deals
Various developers and house builders are now offering schemes which are designed to
help first time buyers onto the property ladder. It benefits the buyer who may otherwise not be able to afford a new property and the developer who may be struggling with slow sales.
Some are offering 95% mortgages in conjunction with lenders, which has been unheard of since early 2008. Others have schemes to help parents lend money to their offspring. Various qualifications may apply here also such as income limits and a need for you to be a first time buyer.
Similar Posts:
- U.K. NewBuy Scheme Aims To Help Buyers
- Buyers beware of new-build home headaches
- First-time buyers: Shared equity scheme to help 10,000 buy homes
- First Time Home Buyer Program – Down Payment Assistance – MHDC – St. Louis, St. Charles and Missouri
- Traditional Seller Prices Rise, Foreclosure Prices Plummet
Tags: Housing Ladder, Part
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