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Which Government Mortgage Schemes Can I Apply For?

It isn't easy to establish which mortgage schemes will give you the most assistance with multiple support programmes and financial incentives. Our latest guide explores the current projects on offer and the relevant eligibility criteria you should know.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-15
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Which Government Mortgage Schemes Can I Apply For?

With various financial support schemes and first-time buyer initiatives, it can be challenging to work out which is the best to apply for and where you are eligible.

Government mortgage schemes refer to a few different programmes, such as Help to Buy for new properties for first-time homebuyers and those designed to support people who already have a property.

Here we'll explain the schemes available and how they work. For more assistance finding support for your mortgage application, give Revolution a call on 0330 304 3040, or drop us an email at [email protected].

What are the Government Mortgage Schemes Available in the UK?

There are a few primary programmes to consider:

  • Help to Buy offers equity loans to help buyers of new-builds get onto the property ladder. Pricing caps apply regionally, from 2021.
  • Shared Ownership allows buyers to purchase a property proportion, usually from 25%, and pay the housing association or local council rent for the remaining balance.
  • Right to Buy applies to council tenants who have been renting a public sector property for at least three years. The scheme isn't available in Scotland but is throughout the rest of the UK. Applicants can purchase their home, often at substantially below market value.
  • Right to Acquire is similar but applies to housing association tenants, with a tiered discount between £9,000 and £16,000.
  • The Starter Homes scheme helps first-time buyers purchase a new-build, similarly to Help to Buy. This programme offers a discount of at least 20% against market value for applicants under 40 and with maximum property value caps.
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How Do Help to Buy Mortgages Work?

The Help to Buy scheme has been extended to 2023, although some regions have price caps implemented from 2021 onwards. Applicants can borrow 20% of the property value, with zero interest payable for five years, with a minimum 5% deposit required.

That means needing to apply for a smaller mortgage and having a substantial deposit to make it easier to get onto the property ladder, with better interest rates available.

Criteria include:

  • Buying a first property that will be your primary residence.
  • Taking out a repayment mortgage.
  • Staying beneath the pricing caps, usually £600,000 but depending on the region.

What are the Interest Rates on Help to Buy Equity Loans?

The loan is interest-free for the first five years. In year six, the interest is 1.75% of the value and increases every year after that.

Interest is calculated against the Retail Prices Index, plus 1% a year. When the property is sold, or the mortgage repaid, the equity loan remains repayable based on the percentage stake at its current market value.

How is Help to Buy Different In the UK Regions?

The scheme works a little differently depending on what area you live in.

  • Help to Buy Scotland comprises two programmes, the Affordable New Build Scheme and the Smaller Developers Scheme.
  • The interest-free equity loan is available up to 15% of the property value, with the same minimum 5% deposit.
  • Applicants cannot already own property unless that home is sold in advance of completing the new purchase.
  • Properties are capped at £200,000 and are available only from participating developers.

In Wales, the system is more similar to England. The same 20% equity loan is available with a 5% deposit and five years interest-free. Properties are capped at £300,000.

Northern Ireland doesn't have a Help to Buy scheme but does have other options such as purchasing discounted properties from the Housing Executive.

What are the Criteria to Apply for a Shared Ownership Mortgage?

Shared Ownership is a way to purchase a property proportion if you don't have the funds to buy a home outright.

  • Applicants must earn under £80,000 a year per household and under £90,000 in London.
  • Only first-time buyers or applicants who have owned a property before but cannot afford the mortgage can apply.
  • Most applicants require a 5% deposit, although this is not always required.
  • The landlord has the first refusal if you sell the property within 21 years from purchasing 100% of the property.

How is Eligibility Checked for Government Mortgage Schemes?

Each scheme is different, but all will look at the below eligibility factors:

  • Your employment status and earnings. Most schemes are aimed at low-income applicants, and mortgages are usually capped at 4.5 to five times your annual income.
  • Credit rating - with specialist lenders usually required if you have adverse credit issues.
  • Age limits, with caps of around 75 or 85 as a maximum with some mainstream lenders.
  • The property you wish to buy. Non-standard properties can be considered a higher risk and may need a niche mortgage provider.
  • Your deposit, with 5% being the minimum with many of the government mortgage schemes.

Are There Any New Government Mortgage Support Programmes?

There aren't any new programmes, but updates have been released to the Help to Buy scheme. This has been extended to 2023.

Equity loans are capped depending on the region, as below:

  • North East England £186,100
  • North West England £224,400
  • Yorkshire and the Humber £228,100
  • East Midlands £261,900
  • West Midlands £255,600
  • East of England £407,400
  • London £600,000
  • South East England £437,600
  • South West England £349,000

Are There Government Support Schemes if I Cannot Keep up with my Mortgage?

Potentially, yes. The Mortgage Rescue Scheme is an option in Wales, although this has been discontinued in England.

Welsh property owners can apply to their local council, often referred by the housing association. They will either purchase a proportion of the property or buy the home and allow you to rent it back at an affordable rate.

In Scotland, homeowners can apply to the Home Owners Support Fund. There are two financial assistance schemes:

  • Mortgage Rent Scheme, where a social landlord buys the property and rents it back to you.
  • Mortgaged to Shared Equity Scheme, where the government purchases up to 30% of the home from you, to reduce your monthly outgoings.

You can also apply to the Support for Mortgage Interest scheme. This offers a repayable loan secured against your property, designed for people who are struggling to keep up with the interest payments on their mortgage.

Can I Get Help with Mortgage Costs as a Benefits Recipient?

Potentially, yes, provided you aren’t on employer benefits such as Statutory Sick Pay.

Usually, if you are on benefits, the government will pay some of your mortgage interest costs directly to the lender, depending on the balance on your mortgage account.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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