subject: Shared Ownership As A Low Cost Home Ownership Option [print this page] The Homes and Communities Agency or HCA is the place to go for those in need of affordable home ownership. A range of low cost options are available for shared ownership and they are all specifically aimed at assisting those who find their earnings to be below what is necessary for home ownership. Households whose earnings fall at or below 60,000 pounds p.a. find they are able to purchase a home which they otherwise could not afford through the plans offered by the HCA which also goes by the title of HomeBuy.
The plans offered include:
1) New Build HomeBuy which allows new buyers to purchase at least twenty five percent of a new built home, and then pay rent on the remainder of the balance. Housing associations, among other providers, hold that remaining share while subsidized by the HCA. The purchaser may, at their option, buy more shares of the home as they can afford to. This process is called 'staircasing' as they work their way up towards full ownership.
2) Rent to HomeBuy, a variation that has been in effect since July of 2008, allows applicants to rent the new home at below market rent, thus enabling them to save money towards a deposit. This provision allows the tenant to purchase a share in that home within five years.
3) HomeBuy Direct offers a new variation of shared ownership that came about in 2009. This approach to home ownership will join the government with a housing developer and see them jointly fund thirty percent in an equity loan. This allows the purchaser to pay only seventy percent of the value of that home in a mortgage.
4) Open Market HomeBuy finds purchasers buying a minimum of twenty five percent of the home and property on the open market; finding it to be partially purchased with a conventional mortgage on that amount, and including a low interest type loan to cover the remaining amount.
5) Social HomeBuy is another option which allows the tenants of participating housing associations and councils to purchase the home they rent on terms of shared ownership, along with a proportion according to that Right to Acquire discount plan.
First time buyers have more options
What has been called the 'First Time Buyers Initiative' is an older plan whereby those buyers who can afford to, arrange a mortgage for at least fifty percent of a home. The government then provides that buyer with an equity loan covering the remainder. This loan is free of interest for the first three years, and then rises to three percent after a period of five years. There are several lenders who subscribe to this or similar plans but they are currently overloaded with purchasers.
Mortgage Rescue is yet another package designed to assist people in purchasing homes by altering their tenure to either Government Mortgage to Rent or shared equity. It is a matter of applying with a local Homebuy Agent to see what help is available depending on financial circumstances of the home buyer. The National Housing Federation wants lenders to understand that participants in these various programs are not to be considered sub prime borrowers.
