Government's First Time Buyers Initiative
Trying to get your foot on the housing ladder is no easy task. With the current problems in the credit markets and the growing cost of living, you may think owning your own home is out of reach. The government has stepped in and tried to launch various incentives to try and make it easier for first time buyers to own their own property.
One of these initiatives is its first time buyers initiative; the scheme is not open to everybody and is aimed at those that are priced out of the housing market because of low wages. To qualify for the first-time buyer initiative you will need to be a key worker, which means you will need to work in a profession such as teaching or nursing.If you do qualify you will be able to take advantage of newly built homes for first time buyers, and the government will give you a percentage of the property’s value. The first time buyers initiative is a joint one between the English Partnerships, and the Department of Communities and Local Government’s HomeBuy scheme.
How the First time Buyers Initiative Works?If you are eligible for one of the schemes then you will have to come up with 50% of the property’s value. For example, if the property is worth £200,000 you will need to have £100,000. You can make up the 50% by a mixture of your own deposit and a mortgage for the rest of the cost. You will stand a better chance of being able to get a mortgage if it for a smaller proportion of the property’s value.
The government will pay their 50% to the house builder of the new development. The government will then be entitled to a share of the money when you sell the house, which will match the contribution they put in. For example, if you sell the £200,000 property for £250,000, then the government will be entitled to 50% of the sale value.You can choose to reduce the amount you will owe the government by making repayments on the current market value of the property.
After three years of being in the property you will need to pay 1% per annum of the amount the government lent you. The charge will increase each year but will not go higher than 3% after five years.
Who Can Qualify?The main qualifiers for the first time buyers initiative scheme are key workers such as those that work in the emergency services, nurses, and teachers. Others that qualify for the scheme will be eligible for other reasons, and it is up to the local government to suggest who is eligible.You will only be eligible to apply for the scheme is your household income is less than £60,000.To qualify for the scheme you must be a first time buyer and prove that you cannot afford to buy a home that is within travelling distance of your work.
You must also show that you can pay a small deposit on the property, no more than 5%, as well as showing you can pay other costs such as Stamp Duty and legal fees. As well as this you must show that you are in a permanent job and that you have a full-time contract with where you work, along with a good credit history.
Other SchemesThe government has also recently unveiled plans to offer free loans for five years to enable first time buyers to buy new build properties.You will not need to be a key worker to take advantage of the scheme, but you will have to have household earnings of less than £60,000. The government will be able to offer a loan for 30% of the value of the property. The loan will be co-founded by the government and the housebuilder.
First time buyers are finding it hard to get on the property ladder, if you are one of these then you should take advantage of any help that the government can offer, but keep in mind that in exchange for them offering you a helping hand, they will also take a share of your property.