Shared Equity House Purchase

Shared Equity schemes – The First Home Fund relaunched on 1st April and 7 days later all the funding from the Scottish Government had been allocated and applications closed.

If you were hoping to use this scheme to help with the purchase of your first home then have you considered the other shared equity schemes available?

Mortgage Advice

Help to Buy

The Help to Buy Smaller Developers New Build scheme Affordable New home scheme is for new build property being sold by registered home builders. This is available for both home movers and first time buyers but there is a maximum purchase price which is £200,000 with the maximum assistance available 15% of the purchase price.

A list of the smaller developers under this scheme is available at Help to Buy (Scotland) Smaller Developers New Build Scheme.

New Supply Shared Equity (Home Builder)

This is open to First Time Buyers but you can also be considered where you may have previously owned a home and have experienced a significant change to personal circumstances such as a martial breakdown. The scheme can also apply a maximum household income which if exceeded would mean that you would not qualify.

This scheme is available via some housing associations and house builders. This can be as part of the planning permission to build a set number of affordable homes.

The assistance available will range from 20% to 40% of the purchase price of the property. And you are required to contribute typically 5% deposit from your own funds. 

You will own 100% of your new home but the Scottish Government will take a security over the property for the percentage of the assistance provided. A version of this scheme is also offered from some Housing Associations / builders with the shared equity loan being split between the Scottish Government and Housing Association / builder.

More information is available at https://www.mygov.scot/new-supply-shared-equity-scheme/overview/

LIFT Open Market Shared Equity Scheme (OMSE)

With this scheme there are restrictions on the maximum purchase price and size of property that can be purchased depending on where the property is located.

If accepted, you are then able to purchase a property that is being sold on the open market and are given a 3 month time period to secure a property which needs to be approved by the scheme prior to making a offer on it.

You must contribute towards the purchase with the maximum mortgage you can obtain plus any deposit you have available. You can get between 10% and 40% assistance from the Scottish Government in the form of an equity loan. If with the mortgage available and your own deposit you can raise more than 90% of the purchase price you will not be eligible for the scheme.

https://mortgagebrokeraberdeen.com/lift-shared-equity

Financial Advice

Whether a first time buyer or a looking to move home getting the correct financial advice is the key to making your plans a reality. To discuss the different shared  equity schemes and get the mortgage advice you need get in touch with David on 01224 679330 or email david@portfs.co.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

Shared Equity Home Purchase Schemes

Mortgage Advice

If you are looking to purchase a new home then there are a number of “shared equity” schemes available from the Scottish Government to assist and I have summarised below details of these shared equity schemes. 

First Home Fund

The Scottish Governments First Home Fund has proved very popular since its launch and has now run out of funding for the current financial year. The scheme will reopen in the New Year for applications from First Time Buyers for purchases completing between April 2021 to March 2022. (for more information on the First Home Fund head over to https://mortgagebrokeraberdeen.com/first-home-fund)

The First Home Fund is the most flexible of schemes available to assist First Time Buyers but it is not the only “Shared Equity Scheme” available.

LIFT Open Market Shared Equity Scheme (OMSE)

With this scheme there are restrictions on the maximum purchase price and size of property that can be purchased. This is based on the area in which the property is being purchased and the size of property allowed for your household.

If accepted, you are then able to purchase a property that is being sold on the open market. You must contribute towards the purchase with the maximum mortgage you can obtain plus any deposit you have available. You can get between 10% and 40% assistance from the Scottish Government in the form of an equity loan. If with the mortgage available and your own deposit you can raise more than 90% of the purchase price you will not be eligible for the scheme.

https://mortgagebrokeraberdeen.com/lift-shared-equity

New Supply Shared Equity (New Builder)

This again open to First Time Buyers but can also be considered where you may have previously owned a home and have experienced a significant change to personal circumstances such as a martial breakdown. The scheme can also apply a maximum household income which if exceed would mean that you would not qualify.

The assistance available will range from 20% to 40% of the purchase price of the property. You will own 100% of your new home but the Scottish Government will take a security over the property for the percentage of the assistance provided.

More information is available at https://www.mygov.scot/new-supply-shared-equity-scheme/overview/

Help to Buy

The Help to Buy Affordable New home scheme is for new build property being sold by registered home builders. This is available for both home movers and first time buyers but there is a maximum purchase price which is £200,000.

The maximum assistance available is 15% of the purchase price.

How the scheme works – https://mortgagebrokeraberdeen.com/category/help-to-buy

Mortgage Advice

To find out more about the different schemes and whether you would qualify and if they would be of benefit to you get in touch with David who will be able to review your mortgage options.

Call David on 01224 784030

Email david@portfs.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.

First Home Fund

What is the First Home Fund?

The First Home Fund is a shared equity scheme run by the Scottish Government and aims to help first-time buyers purchase a property. Up to £25,000 is available to all first-time buyers towards the purchase of both new build and existing properties.

A first-time buyer is anyone that does not own, or has previously owned, a property in Scotland or anywhere else in the world. If you are applying for a joint mortgage, only one applicant needs to be a first-time buyer to qualify for the scheme, provided that none of the joint applicants still own another property by the time you are ready to complete the purchase of your new property. If you and your partner are both first-time buyers you will only be able to receive one contribution towards the property from the Scottish Government.

In order to take part in the scheme, you will be required to provide a minimum deposit of around 5% (subject to individual lender requirements) and your mortgage must be at least 25% of the purchase price. Although the Scottish Government will have an equity share in the property, you will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.

You will normally repay the Scottish Government’s percentage equity share when you sell your home, however you can choose to pay this off earlier.

What is Shared Equity?

Buying through a shared equity scheme means you split the cost of purchasing the property with the Scottish Government. You will fund your share through a deposit and a mortgage, with the remaining share being provided by the Scottish Government.

There are no monthly payments or interest payments to the Scottish Government for their contribution. Instead, you will normally pay it back when you sell your property, or you can choose to increase your equity share over time.

As an example, if your deposit and mortgage pays for 85% of your home’s value when you buy, the Scottish Government will hold a 15% share. This means that when you sell, you will receive 85% of the final sale price and the Scottish Government will receive 15%.

This does not mean that the Scottish Government has an ownership right to the property. You will own the property outright and hold the full title.

Who is the First Home Fund for?

The scheme is open to all first-time buyers in Scotland who are taking out a mortgage. You will not be able to apply to the scheme if you are a cash buyer or if you have previously owned a property in the UK or abroad at any time (as either a sole or a joint owner).

While the scheme is open to all first-time buyers there are a few requirements that you will need to be aware of:

  • The maximum contribution from the Scottish Government is £25,000 or 49% of the property valuation figure or the purchase price (whichever is lower). If you purchase a property for less than the valuation figure then the maximum Scottish Government contribution is £25,000 or 49% of the purchase price.

Find out more

To find out more information on the First Home Fund and discuss how it may be able to help you own your first home get in touch with David Butler.

Email: david@portfs.co.uk

Telephone: 01224 050929 or 01224 784030

Your home may be repossessed if you do not keep repayments on your mortgage.

www.portlethenfinancial.co.uk

Bank of England – Base Rate

A look back at base rate over the last 20 years

The Bank of England Official Rate or base rate over the last 20 years. In the chart below the first nine years shows what was a pretty normal range for base rate which averaged 4.95% over the period to Oct 2008. Since March 2009 rates have remained very low with only four changes to it over this period. 

If you have taken out a mortgage or remortgaged over the last 10 years you would be forgiven to think rates were always this low!! 

What next for interest rates?

That depends on Brexit, the economy and inflation.

The Bank of Englands role is to control inflation and they have a target of 2% and the Bank of England official rate will be changed to keep inflation at or close to this target rate. However they also have to take other economic factors into account.

In the latest monetary policy committee inflation report the bank that it would restrict the pace of interest rate rises over the next two years to no more than 0.25% due to Brexit uncertainty and a slowing economy. However Mark Carney the Bank of England Governor also warned that a modest recovery to the economy over the next 3 years will warrant higher interest rates.

If your mortgage rate is ending soon then considering a fixed rate is worth considering. If you would like to review your options get in touch with David for a free mortgage review.

David can be contacted on 01224 784030 or by email on david@portfs.co.uk

Chart Data supplied by Bank of England

Free Mortgage Review

Help to Buy ISA

Are you a First Time Buyer and saving for your deposit?

Then let the government boost your savings by 25%!!!

If you save in a Help to Buy ISA you will get a £50 bonus for every £200 you save up to a maximum bonus of £3,000.

Entry to the Help to Buy ISA closes on 30th November 2019

How does it work?

Help to Buy ISA’s are available from a range of banks and buildings societies and the accounts are available to each first time buyer. So if you are purchasing jointly then you can each benefit from the 25% bonus provided you each save the minimum amount required. If you both save the maximum allowable that a combined bonus of £6,000.

You can open the account with any amount but in your first month you can deposit a lump sum of up to £1,200 and then save up to £200 per month.

Once you have saved a minimum of £1,600 you qualify for the 25% bonus. The maximum bonus is £3,000 and this would mean saving £12,000 to qualify for it.

Your solicitor will collect the government bonus amount and this will be used along with your savings towards the deposit for your first home.

To qualify for a Help to Buy: ISA you must:

  • be 16 or over
  • have a valid National Insurance number
  • be a UK resident
  • be a first time buyer, and not own a property anywhere in the world
  • not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps.


To qualify for the government bonus, the property you are buying must:

  • be in the UK
  • have a purchase price of up to £250,000 (or up to £450,000 in London)
  • be the only home you will own
  • be where you intend on living
  • be purchased with a mortgage

If you have any questions on mortgages or saving for your deposit for your new home than please get in touch.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Portlethen Financial Services

Mortgage Advice Aberdeen

 

David Butler specialises in providing mortgage advice tailored to your specific circumstances and mortgage needs. To arrange a free mortgage and insurance review get in touch.