How the government can help you to get on the property ladder

For first time buyers it can be a struggle to get that first step on the property ladder. Finding money for the deposit can often be a major hurdle.

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The government put together a number of schemes to help first time buyers get a foot on the property ladder, https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loan.

Help to Buy Equity Loans

The Help to Buy Equity Loans are designed to help first time buyers put a deposit on a home. The government lends money to a first time buyer to help put a deposit down on a newly built home. It must be the buyer’s main home and cannot be used for a buy to let property. You have to put down a deposit of 5% of the value of the property, the government lends 20% as a help to buy equity loan and then you take out a mortgage on the rest of the value of the property.

Many help to buy equity loans are managed by Target Servicing Limited, a private company that entered into an agreement with Homes England to deal with the customers of Help to Buy once they have finished the process of buying their home. Target deal with such things as collecting interest payments, sending out letters and statements as well as one-off events such as handling the process when you want to repay your Equity Loan. If you decide to sell the property that you took out the help to buy equity loan on, then you need to consider the options of the Target Help to Buy redemption arrangements, which include selling the house and redeeming the loan in full, keeping the property and repaying the loan in full or staircasing and repaying the loan in part.

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If you want to redeem the help to buy equity loan, you can find a good conveyancing solicitor who will tell you all you need to know about the target help to buy redemption options.

Shared ownership

You can buy part of a property and pay rent on the remaining share. The purchaser pays a mortgage on the part of the property that they own and then pays the balance as rent to a housing association. As the mortgage is only for a share of the property, it reduces the amount of deposit needed for the purchase.

First Homes

The First Homes scheme is for new buyers and allows them to buy a new home with a 30% discount on the purchase price. This was designed to help new buyers stay in their local area and is aimed at keyworkers and other frontline workers.

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