What You Need to Know About Financial Aid for New Home Buyers

Tuesday, March 31, 2020, 6:00 AM | Leave Comment

There are many people who are looking to buy homes, so when the opportunity arises, you may want to purchase a new build that no one else has lived in.

It’s just for you, and very often you can get it just right by requesting your own specifications.

However, you might find that you need some financial support in order to help secure your dream new-build property.

The good news is that there are several financial options that are available to you if you find the perfect new home.

There are several solutions, depending on your situation and where you live, so have a look at what you could use before going ahead with your property purchase.

  • Help to buy equity loans

    This is a government loan that you can use in combination with a deposit and a mortgage to buy a new-build property. You will need to have a deposit of at least 5%, plus a mortgage to cover the rest of the property’s value.

    The amount that you can borrow with this loan is as follows:

    • Up to 20% in England and Wales
    • Up to 40% in London
    • Up to 15% in Scotland
    • Not available in Northern Ireland

    To use a property in England (outside London) for £200,000 as an example, you will need a £10,000 deposit and a £150,000 mortgage – which will mean that you can get £40,000 with a help to buy equity loan.

    Not only will you have a low deposit, but because you’ll be borrowing only 75% of the property’s value, you’ll be able to get better mortgage rates. Make sure that you consult a help to buy specialist in order to get advice on what you could do.

  • Mortgages

    The process of applying for a mortgage will be the same whether you’re buying a new-build home or not. However, once you’ve put down a deposit, you may have to exchange within 28 days – which might be a challenge for lenders to be able to complete your application in time.

    You shouldn’t have any problem getting a mortgage to help you to buy a new-build property before it’s completed, as many lenders are familiar with such situations. However, if you think your home won’t be ready in time for you to take up your original mortgage offer, you may be able to get an extension.

  • Shared ownership

    You can get a shared ownership home through a housing association, where you can buy between 25% and 75% of a property and pay rent on the rest. You can do this if your household earns £80,000 a year or less (£90,000 or less in London), and you’re either a first-time buyer, you were a homeowner but can no longer afford to buy one, or you’re already a shared owner.

Once you’ve become the owner, you can buy more of your home. The cost of your new share will depend on how much the property is worth when you do this; it will be more than your first share if local property prices have gone up, or less if they have gone down.

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