Ian Fitzgerald is area development manager for Thinc Group Ltd
“The days when Brett would need a 5 per cent deposit are gone, but schemes which offer up to 125 per cent of the property value or some kind of shared ownership need very careful consideration. Upfront costs are one key issue, with valuation fees, application fees, and Stamp Duty, once the price rises above £125,000, all to be carefully planned for. Many housing corporations and local authorities are now offering HomeBuy schemes and, if Brett has been accepted into one of these, it would be worth serious consideration.
However, these schemes are often tailored by the local authority to meet housing needs in their area and they may not suit Brett’s circumstances. Products are constantly being developed to assist first-time buyers (FTBs) but they are often complicated and need careful thought. Brett would need to have all the options explained in detail before any recommendation could be made.”
Pauline Hibbert is a mortgage adviser at Mortgage Options
“For shared ownership, Brett would be putting down £40,000 on a 40 per cent share and paying rent on the other 60 per cent. The best rate at present is Nationwide’s tracker at 5.38 per cent. However, many FTBs prefer the security of a fixed rate and Britannia currently has a two-year fix at 5.49 per cent.
The advantage of the HomeBuy scheme is that Brett will have greater purchasing power and own 100 per cent of the property. Advantage allows the client to have a mortgage up to 82 per cent with the remainder on residential ownership loan. The rates are a three-year fix of 7.49 per cent for the mortgage and 3.99 per cent for the term of the residential loan.
The government-backed scheme is similar, but there are three parts: the mortgage for a maximum of 77.5 per cent, residential loan at 12.5 per cent and the remainder of a government equity loan.”
Paul Chapman is head of sales at Halifax Intermediaries
“In order to be eligible for the Open Market HomeBuy scheme, Brett would need to purchase a minimum 75 per cent stake in the property. This 75 per cent is provided by Halifax as a repayment loan. We currently offer a tracker rate of Base Rate plus 0.90 per cent for the first five years, reverting to Base Rate plus 1.5 per cent.
Shared equity is another option. However, there are few schemes which allow the client to buy a smaller portion than an equity partner. These are usually offered by housing associations but Brett would need to check his eligibility.
If Brett isn’t keen to buy a bigger stake, then shared ownership would be the best option. With DIY shared ownership, the applicant finds a property on the open market which meets criteria agreed with the housing association.”
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