GOVERNMENT SUPPORT FOR HOME OWNERSHIP Flashcards
WHAT IS THE GOVERNMENTS ROLE IN THE MORTGAGE MARKETS?
the government has a substantial role in shaping the mortgage market that we know today. currently it facilitates a number of schemes aimed at supporting those in need of housing to get onto the property ladder.
help to buy: mortgage guarantee scheme
the mortgage guarantee scheme offers lenders the option to purchase a guarantee on mortgages where a first time buyer has a deposit of 5%.
help to buy: extra info
the scheme will run until 30/6/25 and compensates mortgage lenders if the buyer can’t make payments and the house is repossessed. the guarantee applies to 80% of the purchase price, protecting lenders from up to 95% of any potential net losses. Remaining 5% of losses are still the responsibility of the lender and this ensures that they retain some risk in every loan they arrange
Right to buy:
only available in England and northern ireland. if you are a council house tenant it allows you to buy the property at a discount.
Right to buy: not qualifying in england
IF you live in England and don’t qualify for right to buy, may still be able to get a smaller discount under the right to acquire scheme.
Right to buy: NI
if you live in NI and have been a housing executive or housing association tenant for 5 or more years, you may get the property at a discount. the longer your tenancy, the bigger your discount.
Maximum discount for Housing executive / housing association tenants?
£24,000/ discount will be 20% of property price if you have lived there for 5 years and every subsequent year is 2% extra, up to 60% or £24000.
Shared ownership:
where you buy a share of a home from a landlord, usually the council or housing association and pay rent on the rest. You need a mortgage to pay for your share, between 25-75% of the property value and pay a reduced rent on the rest. Later can staircase your way up to full ownership if you wish.
Shared ownership in Scotland:
New supply shared equity / open market shared equity. aimed at first time buyers and those who have gone through significant household events.
New supply shared equity (NSSE)
The NSSE scheme is available across Scotland. It’s open to first-time buyers and these priority access groups:
people aged 60 and over
social renters (people who rent from the council or a housing association)
disabled people
members of the armed forces
veterans who have left the armed forces within the past two years
widows, widowers and other partners of service personnel for up to two years after their partner lost their life while serving
The NSSE scheme is also available to people who have previously owned a home and have experienced a significant change in circumstances – for example, a marital breakdown.
you pay the biggest share, usually 60-80% and gov pays the rest.
open market shared equity:
similar target groups, for people who cannot afford the full value of the property. must be able to prove you cannot afford it.
cannot exceed maximum threshold price, which is dependant on area and number of bedrooms in the property. you will be assessed on application and told your maximum prices you can look for.
Lifetime individual savings account (LISA)
you can use a Lisa to buy your first home up to £450,000 or save for retirement. you can save up to £4000 and the government will top it up with 25% of your savings.
LISA requirements:
need to be between 18-39 to open the account.
first payment must be made before you turn 40
can save into LISA until you are 50
if buying with another first time buyer who has a LISA you can both use LISAs towards the same property deposit.
penalties apple for taking money out for other reasons than a deposit or withdrawing after 60.
help to buy ISA:
if opened before November 2019 can still be used for a deposit before December 2030. Similar to isa allows 25% bonus but limited to £200 per month rather than £4000 per year
