Help with buying or co-ownership: what is best for buyers in England?
Condominium is one of the government assistance programs for those whose price has come out of the open market. The other main one is help with purchasing. But if you're interested in the latter, put on your skates, because the scheme is ending soon in England, with October 31 the deadline for new applications.
Under help on purchase in England, the government lends a buyer between 5% and 20% of the total purchase price of a newly built house, or up to 40% in London. The buyer must pay a deposit of at least 5% of the value of the property. The good news for buyers is that there is no interest to pay on the government portion of your loan for five years.
The government loan also means you will need a smaller mortgage, which will be easier to pay. In London, those who get the full equity loan only need a 55% mortgage.
The cons? In year six, you pay a monthly interest charge of 1.75% of the equity loan, which will then increase each year based on the inflation measure of the Consumer Price Index plus 2% . Given that the inflation rate is currently at 10.1%, that's a scary prospect for buyers today (although in five years inflation may be under control.)
Essentially, the amount you repay is a percentage of the market value of the property at the time you choose to repay. So if the value of your home increases, the amount you owe on your equity loan also increases. Likewise, if the value drops, what you owe also drops.
Condominium is one of the government assistance programs for those whose price has come out of the open market. The other main one is help with purchasing. But if you're interested in the latter, put on your skates, because the scheme is ending soon in England, with October 31 the deadline for new applications.
Under help on purchase in England, the government lends a buyer between 5% and 20% of the total purchase price of a newly built house, or up to 40% in London. The buyer must pay a deposit of at least 5% of the value of the property. The good news for buyers is that there is no interest to pay on the government portion of your loan for five years.
The government loan also means you will need a smaller mortgage, which will be easier to pay. In London, those who get the full equity loan only need a 55% mortgage.
The cons? In year six, you pay a monthly interest charge of 1.75% of the equity loan, which will then increase each year based on the inflation measure of the Consumer Price Index plus 2% . Given that the inflation rate is currently at 10.1%, that's a scary prospect for buyers today (although in five years inflation may be under control.)
Essentially, the amount you repay is a percentage of the market value of the property at the time you choose to repay. So if the value of your home increases, the amount you owe on your equity loan also increases. Likewise, if the value drops, what you owe also drops.
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