Affordable housing programs are available for those who find it difficult to afford buying their own home. If you are struggling to get onto the property ladder, the guide below can help you find a program that could help you.
What are the types of Affordable housing programmes?
Help to Buy
The help to buy scheme can increase your deposit from 5% of the property value up to 25% of the property value. If you put in a 5% deposit then the government will provide an extra 20%, allowing you to get much better interest rates. The first 5 years of this loan are interest free, after which you will pay a monthly interest rate of 1.75% with increases.
This loan can only be taken out if you meet the criteria. Firstly, you must be a first time buyer. Secondly, you must be paying at least 5% of the value as a deposit. Thirdly, the property that is being purchased must be a new build, with the home builder being a registered provider of help to buy homes. Fourthly, there are maximum property prices for each region which must be followed. Finally, you or anyone you are buying the property with must not have had any form of sharia mortgage finance.
This scheme allows eligible council and housing association tenants buy their home with a large discount up to £82,000 outside of London (£112,300 in London). To be eligible for this scheme you must have rented from the public sector for at least three years. As well as this the property must also be your only or main residence. It must also be self-contained, so not sharing facilities with those outside of your household. There must also be a legal contract between you and the landlord. The discount can be used as a deposit, allowing you to get a 100% mortgage for the remaining amount.
The Shared Ownership (SHO) mortgage is a government scheme is intended to allow individuals to get a smaller share of their property. Usually, this is 25 percent, 50 percent or 75 percent, and therefore first-time buyers can get on the property ladder. The scheme means that they would need a smaller deposit than would normally be required for an entire home. For example, the buyer has £10,000 as a deposit, this will represent 20% of a 50% stake in a £100,000 house.
Another advantage of shared ownership would be that the monthly payments for the mortgage will be reduced. But, the buyer has to pay rent on the share of the house they don’t own. This is typically paid to a housing association, and will increase the monthly cost, while the rent is subsidised. However, you’ll have the opportunity to raise your ownership share over time and be able to buy out the rest of the rented part of the property which is known as “staircasing”.
Social HomeBuy shares a lot of characteristics with shared ownership. However, it is different in that you would be able to buy a share of a property you are currently renting. Not many housing associations offer this. Once you buy a share of the property you will no longer pay rent on that share, but will continue to do so on the rest of the property. From there onward staircasing is available, and so you can increase the share you own of the property.
Home Ownership for those with Long term Disabilities (HOLD)
If you have a a long-term disability, then you can apply to the Home Ownership for People with Long-term Disabilities (HOLD). However, you can only apply for HOLD if the homes being offered through other home ownership schemes don’t fit your requirements. For example, if an applicant needs a property on the ground floor. HOLD works much the same way as the shared ownership program, with participants owning shares of their property with the opportunity of “staircasing”.
As well as this, the household needs to earn less than £80,000 outside London, or £90,000 or less in London. You also have to be either a first time buyer, someone who used to own a home but can no longer afford to, or currently living in a shared ownership property. Different councils have different priority groups, so it may be worth checking you you are in a priority group for your council, which may speed up the process.
Older Persons Shared Ownership (OPSO)
If you are aged 55 or over then there is another scheme. This scheme is called Older People’s Shared Ownership. Once again this works very similar to shared ownership, but you can only buy up to 75% of your property. Once you reach this maximum you will not have to pay rent on the remaining share.
The other criteria for this scheme are the same as above. Firstly, the household needs to earn less than £80,000 outside London, or £90,000 or less in London. You also have to be either a first time buyer, someone who used to own a home but can no longer afford to, or currently living in a shared ownership property. Different councils have different priority groups, so it may be worth checking you you are in a priority group for your council, which may speed up the process.
Social rent are when properties are owned by the local authority, and rents cannot be more than 80% of the local market rent. This scheme was set up to support those whose “needs are not adequately served by the commercial housing market”. For more information about social rent and whether you are eligible, contact your local council.
These properties are available on the private market, so generally the rent may be higher than socially rented properties. However, providing the homes are with a registered provider, these homes will be let below marker rent. The rent will be a maximum of 80% of the local rent for a equivalent home. For more information, visit the government website.
Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG
Authorised and regulated by the Financial Conduct Authority – Number 681423The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages
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