Not everyone can afford to buy a home on the open market. Recognising that most people want to become home-owners, the Government supports a number of schemes that provide people with a lower-cost way of buying a home. The main ones are set out below, and there is a much wider range of information and leaflets about low-cost home-ownership available on the Department of Communities and Local Government website. If you are a "key worker" you may also qualify for help to buy a home under special schemes.
If you rent your home from a social landlord such as a local authority or housing association, you may be able to buy your home from them. Some schemes offer discounts on the price of the property. The "right to buy" is the most widely known scheme for buying your home from the council, and it offers discounts which can be quite large. Ask your landlord whether you qualify to buy your home.
For some people, shared ownership is a suitable option to consider. Shared ownership is a "half-way house" between buying and renting. You buy a chunk of the property - say 50% - with a normal mortgage from a lender. You then pay rent on the other chunk to a social landlord such as a housing association and you have the facility to buy another chunk at a later date - for example, when your earnings have risen thereby allowing you to qualify for a larger mortgage. There isn't always a big difference between the cost of shared ownership and the cost of full ownership, but it is definitely worth checking out this option if you would find it difficult to get a large enough mortgage to buy a home in the normal way. Shared ownership schemes are normally run through housing associations, who will have their own mechanisms for deciding who can qualify for them.
"Homebuy" is another form of part-ownership. Unlike shared ownership, on which the householder pays rent on the proportion of the home they do not own, no rent is payable under Homebuy. Instead, you get a mortgage for 75% of the value of the property (sometimes 50% in Wales), but the remaining amount is held by a housing association, which reclaims its share when the property is eventually sold. This brings down the cost significantly, compared with full ownership. Like shared ownership, it gives you the opportunity to "staircase" and buy extra chunks of the property, if and when you can afford to do this. But availability of Homebuy is very limited, although the Government hopes to expand the scheme significantly in the future.
Extracted from the Council of Mortgage Lenders website (June 2011)
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