First time buyers have been treated unfairly in recent years. They have been encouraged by lenders to borrow more than they can afford, obtaining loans equating to over 5 times their incomes, and the price of starter homes available to them have soared, partly due to the Buy to Let Market investors.

It is about time that First Time Buyers are offered real help in getting on the property ladder; they deserve the opportunity to buy their own home, at a price they can afford without moving miles away from their chosen location.

Shared Ownership Mortgages and properties are one solution. These properties are offered for sale by Housing Associations who act as agents for the Government. Buyers buy a % of the property value, typically 25% to 50%. A shared ownership mortgage is raised for the buyers share and a nominal rent is paid to the Housing Association for the remaining share. The deposit required is typically 10% of the buyers share, for example;

Property Value £200,000
Share purchased 25% (£50,000 mortgage)
Deposit required £5000
Income required approx. £14k - £20k

Thanks to the Shared Ownership Mortgage scheme, low to middle income earners have a real opportunity to purchase their own home. Even in London, where first time buyers have been prevented from buying due to soaring prices, properties are available on a shared ownership basis. This much more attractive option, offering more security than the rental option.

For higher income earners New Build Shared Equity may be the solution. The Government is not involved in the scheme. Builders and Developers offer developments where purchasers again buy a % of the property value, typically 75% - 85%. The Builder retains the remaining share, and lenders do not request a deposit from the purchaser. No rental is payable to the Builder, however the remaining share must be bought from the Builder within 10 years or when the property is sold, whichever is soonest.

The Shared Equity Mortgage has another distinct advantage, because the lenders are only lending maximum 85% of the property value, the interest rates available are much more favourable, typically 1.5% lower than if the purchaser placed 10% deposit on a normal property on the open market.

Not all lenders offer Shared Equity Mortgages and Shared Ownership Mortgages, some lenders offer one type and not the other.  It is wise to seek advice from a Mortgage Broker to ensure the mortgage goes through smoothly with a relevant lender.

Of course both the above Shared Ownership Mortgages and the Shared Equity Mortgages are available only for new builds. If you want a property on the open market you have no option but to fund a deposit, currently 15% is realistic and cannot usually be raised as a loan.

If you want to know more about shared ownership & shared equity mortgage schemes, then contact Click n go Mortgages here.

First Time buyers are to be given a helping had to the tune of £400m towards Shared Equity Mortgage Schemes. The amount promised by the Government has risen from £300m in September 2008. Housing Minister Margaret Beckett stated that the Government are determined to provide “real help” for families in the current difficult economic climate.

The scheme is designed to assist households with incomes below £60,000 buy a brand new home.  A deposit of up to 30% will be made available via a Shared Equity Mortgage Loans, funded partly by the Government and the Developer, a mortgage will be raised for the remaining share. The loan will be free of charge for five years.

Many developers offer a version of the scheme already, known as New Build Shared Equity Mortgages, and more than 130 developers have agreed to take part in the new initiative. It is no surprise that the house building industry was one of the first to be affected by the economic climate. The scheme’s support will undoubtedly be welcomed by developers and their employees and prevent job losses.

Mrs Beckett said: “For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder.” She added: “This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going.”

First Time buyers who prove eligible will be able to apply for the scheme as early as the first quarter 2009.

But the Royal Institution of Chartered Surveyors (Rics) warned that the scheme would only be successful if the banks gave out mortgages to applicants for the scheme.
“The attitude of mortgage lenders will determine if the scheme is a success and to work effectively the major lenders must be prepared to give people mortgages to buy their share of the property,” said James Rowlands, Rics policy officer.

True, but as many lenders have been lending on a version of this scheme since the late 1980’s,  as well as shared ownership mortgage schemes, it would appear that they do have the right attitude, they would be foolish to ignore what will become the “norm” for first time buyer borrowing.

If you want to know more about shared owenrship & equity mortgage schemes, then contact Click n go Mortgages here.

Deposits are the problem. The number of mortgage deals is shrinking as lenders ration there home loans in favour of people who can afford to put down a deposit. You dont have to with a shared equity mortgage or a shared ownership mortgage.

According to Moneyfacts, the number of deals on offer has shrunk by 65% in the past year and by a quarter since the start of November. There has been a huge restricton on the mortgage deals available if you don’t have a deposit. With a shared equity mortgage you can take that first step onto the property ladder without putting down a deposit.

Under the Open Market HomeBuy shared equity mortgage scheme you buy 75% of a property, taking a mortgage from a select number of lenders - the remaining 25% is provided via a shared equity mortgage loans from the mortgage lender and the Government. You can choose a property being offered on the open market subject to Homebuy Agent’s approval of the property.

If you want to know more about shared equity mortgage schemes, then contact Click n go Mortgages here.

We used to live in a society of tomorrow doesn’t matter, High Loan to value (LTV) loans, self cert mortgages and a focus on high growth and high risk sub prime lending which meant that some lenders lost sight of the risks they were taking. The market is seeing much of this lending now unravel.

The mortgage market is now totally different to 6 months ago; it is now wholly dominated by six large, balance sheet lenders. With the recent pass through of the Northern Rock Granite structure, we are unlikely to see any early, restoration of securitisation markets.

For the time being it was not the place for the FSA to answer questions about whether self-cert mortgages or high LTV loans should be monitored more cautiously. There is a market with the Council of Mortgage Lenders that is willing to take an open mind and collaborate with, learning from the past, and making sure that we get a more sustainable market in the future.

When lenders have adequate liquidity, funding and capital; strong systems, borrowers can enjoy the benefits of a vibrant market but are not exposed to unnecessary risk. The end result of this credit crunch will be a more sustainable, more realistic market and homes that everyone can afford to buy and stay in.

If you want to speak to a mortgage advisor about your options with self cert mortgages, then contact Click n Go Mortgages and talk to an expert about your options.

Most social housing is now built on mixed estates with private homes. Where developers have stopped building commercial projects, the social housing – including shared-equity homes – has suffered too. Shared equity mortgage Scheme allows you to buy 75% of a property and get a mortgage on the remaining 25%.

Housing associations buy up mixed developments so that they can help subsidise their social homes with private rents or from sales of private homes. With a virtual standstill in construction, many of the 1,900 housing associations are in big difficulty and are having to merge to avoid closure. About £500 million worth of social housing schemes has been mothballed this month alone.

Lenders are still very selective who they lend too. A shared equity mortgage is good option to help first time buyers get on to the property ladder.

If you want to know more about shared equity mortgage schemes, then contact Click n go Mortgages here.