shared ownership

Saving up to buy your first home is a challenge that can at times, feel impossible. If you’re a future first time buyer looking for tips on saving for your first home, read some of our advice below:

Correct preparation

It’s important to think about what you need to do before you even start looking at properties, such as saving for a deposit. The general rule of thumb is to save at least 5-20% of the value of the property you want to buy.

So if you’re looking to purchase a home that costs £200,000, you’ll need to save at least £10,000 (5%). But saving more than that will grant you access to a larger range of more affordable mortgages.

But keep in mind that deposits and monthly mortgage payments won’t be your only outgoings, you’ll also need to invest in surveys, removal costs, building insurance, stamp duties, and solicitor fees.

It might go without saying, considering what we outlined above, but saving a little extra per month goes a long way in speeding up the process. Perhaps give up a gym membership and exercise at home, or skip your daily coffee; it’s not easy, but in the end it will certainly be worth it.

Taking care of your money also helps you build a better credit rating, which will open you up to a wider range of mortgages later down the line.

Explore your options

The government has several schemes that assist first time buyers onto the property ladder, including:

Shared Ownership – this is where you purchase a share of your property from the landlord (usually a housing association or the council) and rent the remaining share.

Help to Buy – this is where the government makes a 25% contribution to what you have saved. If you save money into a Help to Buy: ISA, for every £200 you save, you will receive a government bonus of £50. However keep in mind that this scheme is only applicable for New Build properties.

Rent to Buy – this is a government scheme which aims to ease the transition from renting to buying, providing subsidized rent for a certain number of years in rent to buy homes. After the time has passed, you have the option to buy the property, or enter a part rent/part buy shared ownership scheme.

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Shared Ownership

This scheme allows you to buy a share in a property and then pay rent on the remaining part.  This means you can start of paying the mortgage that you can afford and then overtime buy a bigger share of the property when your finances allow, this process is called ‘staircasing’.

 

To be eligible to buy a home through Help to Buy: Shared Ownership in England you’ll need to:

Have a household income of £80,000 a year or less outside London, or £90,000 a year or less in London.

Own no other property (you cannot be a homeowner or be named on the deeds of another property).

Have no outstanding credit issues.

Properties that can be purchased through shared ownership are from Housing Associations and can either be new builds or resales of existing shared-ownership properties.  When purchasing a shared ownership property you will work with a Home Buy agent, who will manage your application.

Other shared ownership schemes

There are other schemes that offer shared routes to shared ownership and are focused on particular groups.

 

Key Worker Housing Eligibility:

 

Each housing association will have a specific allowance of properties that are reserved for key workers. Each local authority will have their own specific list of key workers and eligibility criteria but as a general rule you must be employed in a qualifying key worker profession and have a minimum of 5 years to serve before reaching retirement.

 

Eligible key worker job roles include:

NHS

Education

Police

Prison Service

Probation Service

Local Authority

Fire Fighters

Ministry of Defence (MoD)

Environmental Health Officers

Highways Agency Traffic Officers

 

HOLD (Home Ownership for people with Long-Term Disabilities)

This scheme helps assist people with long-term disabilities to purchase a home and live independently. As with other shared ownership schemes, you buy an initial share and then more shares as you can afford it from the Housing Association or Registered provider.  The difference, however, is that if the properties available are not suitable to accommodate your needs, you may be able to buy a property from the open market.  This requires a referral to a specialist provider and your local authority to validate the application.  It is a voluntary scheme and as a result not necessarily available throughout the UK.

 

OPSO – Older People’s Shared Ownership

Supporting people over 55 to home ownership, it follows the same principles as other shared ownership schemes but the properties available are exclusively for those over the age of 55. The maximum you can own however is 75% of the property and if you do so, you will not have to pay rent on the remaining 25%.

If you already have a property this will need to be sold before applying to the scheme.

Extra Care is an extension provided by some OPSO schemes and is a Sheltered Shared Ownership scheme, which provides the added benefit of onsite care. This allows residents to live independently in self-contained, modern homes with access to tailored care package and support programme.

 

Rent to Buy is another route to shared ownership for those who haven’t yet been able to save the 5% deposit that is required.  Housing Associations and registered providers offer homes to rent, the rents are typically about 20% less than the open market rent, giving you an opportunity to save a deposit.  You will also be given the option in the future to purchase a share of your home and staircase up as you are able to invest more in your home.

 

Starter Homes is a new scheme which is due to launch shortly aimed exclusively at people 23-40 looking to get on to the housing ladder.  As part of the planning conditions, developers will be required to supply specific ‘starter homes’ which will then be sold through an approved scheme, priced at least 20% below market value.  The maximum property price outside London will be £250,000 and inside London £450,000.

 

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