It can be tough saving money for a deposit, particularly if you’re paying rent as well. To help those struggling to get on the property ladder in Sunderland, the government introduced various help to buy mortgages.
This article will include the Help to Buy Equity Loan, Help to Buy Shared Ownership, Help to Buy Armed Forces and the Lifetime ISA Scheme. All aimed to help those struggling to get to where they want to be on the property ladder.
The Help to Buy Equity Loan scheme is popular amongst first time buyers in Sunderland. To qualify for this scheme, you will need a minimum of a 5% deposit, and you can only purchase a new-build property.
Once you have saved up for a 5% deposit or more, the government will loan you 20%; if you have a 10% deposit, which makes up a 25% deposit.
You will be left with a 75% mortgage and a government equity loan to pay off. You get five years to pay off this equity loan interest-free.
If you can’t meet the 5-year cut off point, you will start receiving interest in the outstanding loan amount.
As a mortgage broker in Sunderland, we understand the challenges of balancing your mortgage payments and the equity loan repayment at the same time.
There are ways around this. For example, you may be eligible to remortgage to raise capital for this loan, however, doing so may lead to your mortgage payments increase.
The Shared Ownership scheme allows applicants to purchase a percentage of a property and then pay the rest back on rent.
The percentage of the property that you own needs to be between 25-75%. The remaining portion is likely to be owned by the housing association.
The way that your payments work is that you will have both your mortgage plus rent outgoings. So, you are paying 100% of the ground rent and service charge on the property.
Following the success of the Help to Buy Equity Loan scheme, this scheme had a similar concept as its predecessor, except you have to work in Armed Forces.
If you fit into the criteria, it could be an excellent option for you. The good news is that the government has now extended the deadline/review date of the scheme to December 2022.
The Lifetime ISA can be still beneficial, and it can help you secure a property as a first time buyer in Sunderland. Essentially it’s a savings account where the money grows tax-free.
The government will also top up your savings by an extra 25%, so if you meet the £4,000 maximum amount, you will receive a nice £1,000 bonus.
You have to pass specific criteria to gain access to this scheme. All of the details will be on the Government Lifetime ISA page.