One of the most pressing concerns for the vast majority of people in Great Britain is the issue of affordable homeownership. Let’s face it, few of us want to be tenants for the rest of our lives. Aspiring to own your own home is a natural desire that becomes a priority as we get older, but the costs and requirements of covering a mortgage can be too high for some people. So, fortunately, the British government has several programs in UK called help to buy mortgages and right to buy mortgages which aim to help people in the UK with the process of becoming homeowners.
What Are Help to Buy Mortgages?
These types of loans, which first appeared in 2013, are a way for the UK government to provide you with a 20% equity injection so that you can purchase a newly built home. Help to buy mortgages requires an initial deposit of at least 25% to be eligible, and if at least 20% of the capital is provided by the UK government, then you only need to pay a 5% deposit to be granted the mortgage. The geographical area in which you are based can also determine the amount you can receive from the UK government; London benefits from a 40% equity loan, which is double that for the rest of the UK.
So, is This Free Money?
No, not necessarily. We can think of help to buy mortgages as regular mortgages that have been combined with financial help from the British government. Such a mortgage can indeed be extraordinarily advantageous for you, for the simple fact that once the mandatory 25% deposit is paid, well above the minimum deposit of 10% that applies to standard mortgages, your monthly repayments will also be lower. But that minimum 20% you receive is not free money and is ultimately an interest-free loan for the first five years of your home ownership journey. If you can’t repay the loan after those 5 years then yes, the UK government will charge you an interest rate of 1.75% which may increase depending on several factors.
How do I Qualify for the Help to Buy Mortgages?
The conditions for granting these loans do not differ much from those of a normal mortgage. As in the case of a conventional mortgage, you must be at least 18 years old, have a stable income, and have a work record that proves you can pay the monthly installments on time. There are, however, some differences between the help to buy assistance project and regular mortgages.
First of all, help to buy mortgages only apply to first-time home buyers, so if you already have a property in your name then you do not qualify for this program. Also, an important aspect to consider is that the house you want to buy must be newly built, and the builder must be registered as a participant in the help to buy project. Furthermore, the price of the property you want to buy must not exceed the average prices of other houses sold in the region in which you live. So, you cannot buy a house through the Right to Buy program if the market value of the intended purchase is much higher than the market value of other houses which have been sold in the area in recent years.
What Exactly Are the Right to Buy Mortgages?
First introduced in 1980, the right to buy program is a UK government scheme that allows any tenant who has been in council housing for at least three years the right to buy their home at a low price. Since its inception, the scheme has been hugely successful and millions of people have taken advantage of it to buy their own homes. The main advantages of the right to buy mortgages are the lack of deposit requirements and the large discounts that future owners can enjoy.
As a general rule, the more years you have spent as a council tenant, the more favorable your credit terms will be. As with help to buy, the right to buy mortgages are not free money and you must demonstrate that you have the income to support a monthly payment. You can qualify for the right to buy mortgages even if you are on welfare benefits from the UK government, the only real conditions for eligibility being that you must be over 18, that you have been a tenant for more than three years, and that you can afford the monthly payments without falling behind.
It’s All About Your Homeownership Rights
Both the right to buy and help to buy programs were set up to help UK citizens achieve their dream of homeownership, and it has to be said that in the end, they achieved their purpose. Homeownership is ultimately a fundamental right that can provide much-needed security and comfort for us and our families. True, these schemes are not free funding from the UK government, but they are a helping hand for the many people who might not otherwise be able to afford a home.
The necessary paperwork and thorough research you must do to prepare your application file for these programs may be too laborious for many of us. After all, you are probably a person who works full time and does not have the necessary time to know all the bureaucratic aspects of applying to these schemes. Both you and your family deserve the security and peace of mind in knowing that you have made the best decisions for your financial security. You work too hard and your money is too important to not make the best possible arrangements in your homeownership journey. So, one of the wisest decisions you can make for your sanity and financial security is to hire the services of a professional mortgage brokerage firm that can guide you at every step and be available for any questions or concerns you may encounter.