You Own A House

Government Schemes To Help You Own A House

by Manish Singh

Are you looking to buy a house? Many people have aspirations to own their own home as opposed to renting, and this is understandable. Homeownership has freedom and flexibility that you cannot get with renting, along with the financial benefits of owning a property. Despite this, many people struggle to get their foot on the property ladder as the costs of buying can be very high, and many people might struggle to get approved for a mortgage. Additionally, the rising cost of living and housing market in the UK can make it feel like an impossible task. The good news is that there are a handful of government schemes that can give people a helping hand to get on the property ladder. Here are a few of the main schemes to be aware of.

LISA

A UK government scheme that is rising in popularity, a Lifetime Individual Savings Account (LISA), is a savings account that the Government will top up by 25% annually. You can put in a maximum of £4,000 a year, which means that you can receive a maximum of £1,000 each year up until you are 50. This can then be used to put towards a deposit at any time or withdrawn after the age of 60 to fund retirement (there will be a penalty if you take it out before then). If you are buying with someone else that has a LISA, you can both use these towards the same property.

Right To Buy Mortgages

For those that rent council properties, you may be able to purchase your rented council property at a significant discount with a right to buy mortgage. Introduced in 1980, the Right to Buy Scheme has helped millions of council tenants to get their foot on the property ladder without having to move. Eligible tenants can purchase their rented council property with a discount of up to £84,200 across England and £112,300 in London. This government scheme is available even if you have a bad credit score, and you will want to speak to an expert broker in right to buy mortgages to find the right lender based on your circumstances.

Help to Buy Equity Loan

Another major UK government-backed scheme is the Help to Buy Equity Loan. This is available to first-time buyers looking to buy a new build and allows you to borrow 20% of the purchase price as an interest-free equity loan and is available with a deposit of at least 5%. You do not pay interest for the first five years, and the payments are only on the interest after this.

Help To Buy ISA

Help to Buy ISAs are another good option for first-time buyers that will help those trying to save up for a deposit. The Help to Buy ISA allows you to earn 2.58% interest tax-free, and the Government will then add on 25% for free – this could allow you to add thousands of pounds onto your deposit and help you to save up a decent amount much faster. Rules can be strict, so you should always do your research or speak to a specialist to see if this is the best available scheme for your situation.

Help To Buy Shared Ownership

Shared Ownership is available to anyone earning less than £80,000 a year (£90,000 in London) that does not own a property, so if you were a previous owner, then this is a scheme that you can use along with first time buyers. Essentially, Shared Ownership allows you to buy a share in a property, and you will pay a mortgage on the share that you own (usually between 25% and 75%). You then pay subsidised rent at a price less than the market value. You only need a deposit of 5% on the share that you are buying, which can make it much easier to afford. You can then use “staircasing” to buy more shares in the house, which will involve your mortgage payments increasing and rent decreasing.

Help To Buy Mortgage Guarantee

A new scheme announced in the 2021 Budget, the Mortgage Guarantee scheme, will help many to get on the property ladder with a deposit of 5%. This is through the Government supporting lenders to offer 5% deposit mortgages with a government-backed guarantee on new 95% mortgages.

As you can see, there are lots of good options for those looking to get their foot on the property ladder and options for those in different circumstances. It is tough to purchase a property in the UK right now, but government schemes can make it easier and more affordable for those that are struggling. Speaking to a mortgage broker is a good first step to identify what the best support is for your individual circumstances and to get the ball rolling on purchasing a property.

 

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