Mortgage help to buy

Shared ownership was once only available through housing associations. Those who could not afford to purchase 100% outright would purchase anything between 25% and 75% of a property from a housing association and rent the rest. They would then have the option to buy further shares of the equity and ultimately the property outright as income and circumstances improved. The purchase of future shares would be based on the then value of the property (rather than its original price.)

In an attempt to stimulate the market after the crash the government got in on the act and introduced a range of options under the help to buy banner.

Help to buy shared ownership is detailed here

Help to buy ISA with a government contribution aimed at helping people save for their deposit. It does not help you buy the house. But as you are looking at a property worth more than £450,000 it won’t help you. Full details here

The London version of help to buy equity loan is detailed here However the description of the scheme as an equity loan is somewhat  disingenuous as the scheme is really a derivative of shared ownership. The govt actually acquires an equity stake under guise of a loan. It gets its money back as a share of any capital appreciation rather than payment of interest. It is only available on new build properties which tend to sell at a premium price; the web link above also gives access to the builders that are currently supporting this scheme.

e.g. If you purchase for £100,000 with a 20% government equity loan (£20,000) and sell for £200,000 the government would take 20% of £200,000 (£40,000). This is on top of their quoted fees payable after the first 5 years.  You may choose to make voluntary part repayments (“staircasing” or full repayment) of the help to buy assistance at the then prevailing market value. The minimum voluntary payment is 10% of the market value at the time of repayment.

If you can possibly afford it buying outright may offer better overall value. For example you could set up your mortgage over an initial 35 years and increase your monthly payments as income improves to pay the mortgage off sooner. Alternatively you could use the govt equity loan and look to remortgage after say 5 years to repay the govt. element.

The mortgage market became regulated by the Financial Conduct Authority in 2014. This has made mortgages significantly more complicated. How much you can borrow varies from lender to lender and is dependent on what income each is prepared to include in their affordability assessments.

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