The Shared Ownership Scheme is a variation of a Help to Buy Scheme made by the government, with the purpose of helping people onto the property ladder. It is available to permanent residents of the UK who are either first time buyers in Halifax or former homeowners, perhaps struggling to buy a property.
The criteria for being eligible for Shared Ownership in Halifax is that your household income must be less than £80,000, with your new home almost always being a leasehold property. Leasehold means you will be buying your home for a specific amount of time.
The Shared Ownership Scheme allows people to purchase a home as part mortgage (usually between 25-75% of the property) and also as part rent. The rent (which may include service charges and ground rent) will typically be a lower rent cost than market value, with you paying that to a housing association.
If you have some familiarity with the Shared Ownership Scheme and how it used to work in years gone by, there have been important updates as of April 2021. These changes were introduced as part of the government’s Affordable Homes Programme.
One of the first changes made to this scheme is that whilst the previous minimum property share purchase amount was 25%, in some cases it can now be as low as 10%. Furthermore, you can now buy 1% instalments, as opposed to the former 5-10% share instalments.
Last of all, the fees that you pay when you purchase additional shares is now lower. Instead of you also being responsible for maintenance or repair costs, for the first 10 years of your home ownership, it is actually up to your landlord to cover these.
If you took out a Shared Ownership mortgage in Halifax before these rule changes came into play, these rules may actually apply to you going forward, though it’s always important to check with your mortgage provider first, as this might not always be the case.
Before you tackle your mortgage process, you’ll first need to make sure that you definitely qualify for a Shared Ownership mortgage in Halifax. This requires you to get in touch with a local Help to Buy agent in your area, to find out if you meet the criteria.
When you contact this person, they will usually need a selection of information from you, such as how much income you have, what your budget is, where exactly is your preferred area and what your credit history is like. Once your eligibility is confirmed, it’s on to your mortgage application.
A trusted mortgage broker in Halifax is best when applying for a mortgage, as not every mortgage lender out there has products that work alongside the Shared Ownership Scheme. The amount you can borrow will most likely depend on factors such as income and other fees included, such as what the rent will be.
Of course as tends to be the case with any type of mortgage, there are pros and cons to having a Shared Ownership mortgage in Halifax. To look at it fairly, it’s important to remember, as said above, not every mortgage lender will offer products that work with a Shared Ownership mortgage in Halifax.
Even with that in mind though, there are still lots of mortgage lenders available, including ones we have on our panel, who offer mortgages to those looking to use Shared Ownership in Halifax. These types of mortgages can offer a sense of long-term stability as you become both owner and occupier.
Having the money for a deposit can sometimes be seen as a concern for home buyers, as saving money can be challenging. Thankfully, Shared Ownerships in Halifax tend to require deposits that are lower than open market purchases, making them much more accessible.
Whilst these are certainly great positives, remember you would be paying 100% of the ground rent and service charges, even if you have the minimum share. You are usually able to do something called “staircasing”, which allows you to buy more shares as time progresses, up until you hit 100%.
When you do this, there will no longer be the need for you to pay rent, though your mortgage, ground rent and service charges will still apply. Once your owned share exceeds 80%, Stamp Duty costs may apply, though this won’t always apply to first time buyer mortgages in Halifax.
Even though Stamp Duty costs can be quite expensive, especially when you are factoring in other elements, your monthly mortgage payments can still be a lot cheaper than outright having a mortgage would be. Sometimes it may even be cheaper than privately renting.
Speaking of privately renting, you will benefit from having a secure time in your home, unlike you would renting private. Providing you can keep up your monthly mortgage payments, you are able to stay for the length of your lease, which is often between 99 and 125 years.
Because your home is also part owned by another party, you will need to make sure you get permission from the appropriate housing provider before you look at making any alterations to your new home. This can remove some of the freedom that owning the home outright would have.
After you have owned your home for a while, you may feel like you would rather not remain there and look to sell your home. With other mortgages, so long as your fixed period has ended, this would be fairly straightforward. With a Shared Ownership mortgage in Halifax, this is different.
Whether or not you are able to actually sell your home with a Shared Ownership mortgage in Halifax attached to it, depends on how much of the property shares you own personally. You’ll typically need to own 100% of your home, before you can sell it.
It is important to remember though, that the housing association will in most cases have ‘first refusal’ rights, for the first 21 years following your initial purchase. This means they are, by law, able to make a property purchase offer to you, before you put it on the open market.
If you are not the sole 100% owner of the property, you will need to first look at purchasing your remaining shares, before you look at selling the property.
A Shared Ownership mortgage in Halifax is an option that can prove really useful for first time buyers in Halifax who are determined to get onto the property ladder, but only have a small deposit. This mortgage scheme can help you achieve your home owning goals!
That being said, having a Shared Ownership mortgage in Halifax can prove to be quite complex, as you are taking a lot on. This is even more so the case when you look at the costs involved. Make sure you are fully prepared and know the contract terms.
At the end of the day, it’s all about what you would prefer. By booking in for a free mortgage appointment with a trusted and experienced mortgage broker in Halifax, you’ll get to speak with a mortgage advisor in Halifax and prepare for your mortgage future.
Whether you happen to be a First Time Buyer in Halifax hoping to find your footing on the property ladder, or you are currently Moving House in Halifax, it will become apparent soon enough that there are many different types of mortgages for customers to utilise.
There will be some options that are more popular than others, whilst some may be less common to come across. We have put together a comprehensive list of the different mortgage types we come across the most.
You can watch many more Helpful Mortgage Guides on moneymanTV here or go directly to our “Mortgages Explained” YouTube playlist here.
A fixed-rate mortgage allows for a customer to keep their mortgage payments consistent for a that your mortgage payments are going to remain consistent for a chosen period of time.
You have full control over the length of time in which you can fix your payments for, with people typically choosing 2, 3 or 5 year fixed rates, though possibly longer.
Regardless of any changes to the economy, inflation or interest rates, you can stay comfortable in your home knowing that your mortgage, arguably your biggest ever financial commitments, will stay the same for your fixed period.
A tracker mortgage is where the interest-rate of your mortgage will follow along with the Bank of England’s base rate.
To simplify this for you, the mortgage lender that you end up with will not be the one to choose your interest-rate, and you won’t be deciding that either.
Instead, the interest-rate on your mortgage will be set at a percentage above the Bank of England base rate. For example, if the base rate is 1% and your mortgage is tracking at 1% above base rate, you will be paying a rate of 2%.
A repayment mortgage is the standard type of mortgage you will come across, paying back both a combination of interest and capital each month.
So long as you continue paying your mortgage per month, for the duration of your mortgage term, you will be guaranteed to have paid off your mortgage balance in full by the end of your term, owning the property.
This is all considered to be the most risk-free way to pay back the capital on your mortgage balance. In the early stages of your mortgage term, you’ll mainly be paying back the interest, with your balance reducing slowly, especially with a 25-30 year term.
Your mortgage will alter slightly towards the last ten years or so, as you will be paying off much more capital from your balance than you will be with interest, meaning your balance will come down a lot quicker.
Though you will see a lot of modern buy-to-let mortgages being set up as interest-only mortgages, it is a lot more difficult to obtain a residential interest-only mortgage.
It is not entirely impossible, though it is a lot harder to find these, as mortgage lenders may not offer these to customers.
They do become helpful though in relevant situations, such as potentially downsizing when you are only, or if you have external investments you can use to pay back the capital on the mortgage.
There are much stricter rules with interest-only mortgage products these days, with the loan-to-values on these being much lower than they would be in the past.
By taking out an offset mortgage, your mortgage lender will be assigning a savings account to you, to run alongside your mortgage term.
The way that this works is that if you were to have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you would only be paying interest on the difference between that, which would be £80,000.
This is often considered to be a very efficient way of managing your money, especially if you are paying higher rates of tax.
The amount of deposit you will need for a property and the process of what you are trying to do, will be completely dictated by your own personal circumstances.
Here we explore how much deposit may be required for you and your situation.
In the past, it was quite common to come across 100% mortgages. Before they were nationalised, even Northern Rock was offering 125% loan-to-value mortgages.
What that means, is if you were buying a property valued at £100,000 they would lend you up to £125,000, and yet they were shocked when everything went wrong.
The reason that lenders require you to provide a deposit, is to reduce their lending risk. If they lend you 100% of the purchase price and you end up in any kind of debt, they would then have to take possession of the property. All it takes then is for house prices to change, for them to be at a loss, which of course they don’t like.
There is also a perception that if you haven’t invested some of your own or your family’s money into your home, then you might be more inclined to call it quits if things get tough and you can’t afford your monthly repayments.
It could also be argued that if you can’t save up for or with help, make up at least a 5% deposit for a property, then you likely aren’t ready for a jump into the property world.
Directly, no they are not able to do this. That being said, if you can find 5% of the deposit from your own funds, then there is still a chance you could qualify for the government’s Help to Buy Equity Loan Scheme.
With this scheme only applying only to new build properties, the concept is that you put in 5% and the Government loans you up to 20%, making up a 25% deposit.
After 5 years you need to start looking at paying the equity loan back possibly by way of a remortgage or from savings you have been able to make over the length of time that has elapsed since the start of your term.
Generally speaking, yes 5% is enough for the majority of mortgage types. It does vary between lender though and some will accept only a 5% deposit, limiting the paths you can take.
To combat this, you will normally need a reasonable credit score to qualify for a mortgage in Halifax. There are the odd lenders out there that may consider you for a 95% mortgage with an average credit score, but the rate of interest would also be higher than other mortgages.
Most specialist lenders will require at least 15% deposit if you have a less than favourable credit history. As touched upon earlier in this article, this is simply to reduce their risk in the event of a repossession.
It is a lot harder to obtain this type of mortgage than it was in the mid-2000s but in some cases may still be a possibility.
It has always been a requirement to put down a larger deposit for Buy-to-Let Mortgages in Halifax and most lenders at the moment are looking for around a minimum of 25%.
Technically this could be possible, but almost all lenders will not allow this, as essentially this would still be 100% lending, which no longer exists due to the aforementioned risk involved with this type of deal.
Yes, this happens all the time. Generally, it’s what the industry affectionately has titled the “Bank of Mum and Dad” (both birth and adopted parents, as well as carers & legal guardians) gifting the deposit, or other members of your family, such as Aunties & Uncles.
We have even seen cases where family friends are allowed to gift money too. These are all valid options, as long as they can evidence the funds, prove who they are and confirm they are not expecting you to pay them back at any point in the future.
If you are looking at buying as a sitting tenant and your landlord or family member has given you a discount from the open market value, or if you qualify for a discount under the Right to Buy Mortgage Scheme, then normally you won’t be required to put any of your own money in as deposit.
This is due to the equity being already “built-in” to the deal that is being made.
Please note that the above information and guidance is for reference purposes only and is not to be viewed as personal financial or mortgage advice.
So, you’ve saved up for your deposit (or got the green light from “Bank of Mum and Dad”) and made the decision to move home. What’s the next step? Put simply, and in the best boy scout traditions, it’s time to get prepared.
We’d recommend speaking to an experienced Mortgage Broker in Halifax as early on in the process as possible, so you know how much you can borrow for a mortgage and how much it will all cost. Obtaining an up to date credit report should also be at the top of your list, you don’t want a meaningless squabble with your mobile phone provider holding you back from buying a home. Taking the above two steps will give you a meaningful expectation of how possible this is going to be and what your budget is.
Your Mortgage Broker in Halifax will obtain a fully credit-checked Agreement in Principle on your behalf but you’ll have to prove who you are, where you live and how much you earn. There really is loads of paperwork for you to get together so it’s a good idea to open a file for yourself and start collecting everything in advance.
In terms of proving who you are you’ll need to produce some photo ID such as a Driving license or passport, if you’re a non-UK national working over here on a Visa you’ll need that too.
In addition to the above, you’ll need to prove where you live. You’ll need to produce a utility bill or original bank statement dated within the last 3 months.
The analysis of your spending habits has become one of the most important determining factors in whether you’ll qualify for a mortgage or not. Your bank statements should evidence your income and regular expenditures. Lenders will not be happy to see gambling transactions on your account. Nor will they like it if you go over an agreed overdraft limit or if your direct debits bounce regularly.
You will have to prove you have the funds in place for the deposit and also evidence this for anti-money laundering purposes. Try not to move monies around your various accounts too much as it will make evidencing the audit trail more difficult. Lenders like to see your savings building up so you’ll need to account for any large credits into your accounts.
Quite often money for deposits has been gifted by family members. These funds need to be evidenced also and the “donor” will need to sign a letter. This is to confirm it’s a non-refundable gift, not a loan.
In terms of affordability, the most important thing is to be able to prove your income. If you are employed this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account regular overtime, commission, shift allowance and bonus.
If you are Self Employed then you’ll need your Accountant’s help. This will be to request your tax year overview.
It’s a good idea to do your homework. Write down an estimate of your anticipated 1outgoings after you move house. You can work out an idea of how much the council tax and utility bills will be. In addition to that, you can work out your regular expenditures, such as food and drink. This will demonstrate how much disposable income you have available to pay your mortgage from.
As you can see from the above, it’s a real paper trail when you are applying for a mortgage but if you want your application to run like clockwork you’ll need to put the time aside to get everything together.
My own view is that it’s better to get all this at the outset and collate everything that the lender could possibly ask for. As this saves time and frustration later down the line if you’re subsequently asked for paperwork you could have had ready at the outset.
Whilst it is widely accepted that there is a national housing shortage, the Government has launched several schemes over the years. These have been under the “Help to Buy” banner, designed to get people onto the property ladder.
Unfortunately calling all the schemes Help to Buy has caused confusion amongst consumers! Here’s my take on what’s out there right now.
If you’re in the armed forces, you can borrow up to 50% of your salary, up to a maximum of £25,000 interest-free towards a new home.
There are lots of options available to you. It’s a good idea to speak to your Accountant and also speak to a mortgage broker for advice.
Yes and no, the Help to Buy Equity Loan is for new build properties only. The Forces Help to Buy can be on new or old.
There may be options available to you even if you have a poor credit score. Mortgage lenders are becoming increasingly competitive on criteria and many challenger banks are entering the market. Again, please seek mortgage advice from a local expert!
A minimum of 5% as a rule.
Yes, family members and sometimes friends can gift (not a loan). This is a popular way for First Time Buyers to get on the property ladder. In a recent government survey, 27% of such buyers relied on family and friends to help with a deposit.
Yes, with the Help to Buy Equity Scheme the Government loan is interest-free for 5 years. After this, you’ll pay fees. Hopefully, the property will have increased in value and you can potentially remortgage the property at any time. This likely would be to raise funds to increase your share. Remember, the government will also receive their share of any profit made.
The Help to Buy Equity Loan is only available for First Time Buyers, however, the Forces Help to Buy can be accessed by both First Time Buyers and Home Movers.
The first stage would be to have a free mortgage consultation. This is to work out your maximum borrowing and also to get a mortgage agreement in principle certificate. This puts you in a strong position to make an offer. Once you have this in place you’ll be a “qualified buyer”, the next step is to go and view houses!
For more information and further terms and conditions about any of the above schemes please refer to the ownyourhome.gov.uk website.