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First Time Buyers Must Be Well Organised To Secure The Right Purchase
Author: Carl Shave - Director
Updated on June 30th, 2021

Help to Buy has proved to be a very popular route for first time buyers to get onto the housing ladder. However, the rules for the shared equity scheme changed from 1st April, and the scheme is now planned to end in March 2023.

It only applies to new properties, applicants must have never owned a home and put up a minimum 5% deposit to be eligible for the Government’s 20% equity loan, which is interest free for the first five years. A mortgage will be required to cover the balance.

Regional price caps have been introduced, to take account of differing property values across the country.

Developers are keen to promote the scheme, but buyers are recommended to take independent financial advice before committing. For example, it is important to ensure that they factor the interest payments into their monthly outgoings after the initial five years, and are aware that surveys, stamp duty and legal costs will also need to be covered during the purchase process, as well as utilities and insurance charges.

Shared ownership is another scheme, known as part own/part rent, usually available through housing associations.

Buyers can acquire a 10%-75% share of their chosen property and pay rent on the remainder; it is especially popular with people wanting a larger home than they could otherwise afford based on their available deposit. However, a mortgage will typically still be required for the balance of the property’s value for the purchased share, and the usual survey, stamp duty and legal charges will apply.

Rather than rushing into a deal, any homebuyer should consider alternatives to brand new; established properties can represent better value, especially in terms of ‘longevity’ if they plan to remain in a particular location for up to 10 years. Do online research, checking out different neighbourhoods and developments, as well as facilities; fast broadband is essential, but not always available. Do you want to be near a park for dog walking?

Being organised can also speed up the purchasing process, at a time when demand means that pressure on lenders, solicitors and local authority searches is delaying property exchanges, which are typically taking six months instead of two.

Our Mortgage Centres are available to advise on the most suitable options for all homebuyers, just give us a call.

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