hi, there are a few options for "affordable housing" and the best place to find out about it is www.housingoptions.co.uk
this is the london-centric one but i understand there's a countrywide website which i think is called www.homebuy.com. not 100% on that tho.
basically there are 3 options:
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part buy/part rent thru a housing association like Peabody Trust, Notting Hill Housing Trust, Metropolitan Home Ownership. Basically you buy a percentage and get a mortgage on that percentage. You then pay rent on the remaining percentage and the rent is calculated at a percentage of the remaining market value I believe. This can actually be expensive. My mortgage is currently £500 and my rent is £300 and service charge £100 pcm.
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Open market HomeBuy thru the governemnt and Metropolitan Home Ownership. The scheme has changed recently so check this but when I applied a little while ago it worked that you find a property on the open market. You mortgage 75% and get an equity loan of 25% made up of 12.5% from the mortgage broker and 12.5% from the government. After 5 years you must start paying interest to the lender but not to the govt. When you sell they get their 12.5% back from the equity thus that's how they make their money. Assuming house prices don't go down you should be okay. They get their equity before you do tho so if there is a crash you could be in trouble.
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Newbuild HomeBuy. Essentially the same as openmarket but newbuilds and the builder has to subscribe to the scheme, I think.
You have to apply to housingoptions to see if you are eligable for any/all of the schemes. Once accepted you meet with an IFA who give you an idea of what you can borrow (for the homebuy schemes) then you have 8 weeks to put an offer in.
HA purchases are a bit different. You can do a re-sale purchase or a newbuild purchase.
You must be able to show that you have around £5k to cover legal expenses etc. If you've got a deposit that's excellent too.
The drawbacks are there is only a very small pool of lenders for HA or HomeBuy and they have their conditions of course. The mortgages they offer are no way as attractive as general high st offers. You get locked down with big redemption fees etc.
Personally I think the whole scheme is, as usual, just not adequate. If the govt. is serious about affordable housing they should ensure more lenders are available and there are more competetive mortgage options to choose from.
My story is that I bought HA 4 years ago with a very small deposit. At first the mortgage was competitive (Nationwide are good on this score) and rent manageable. Over the years my outgoings on the property have exceeded £900pcm on a 45% share.
I am now selling this property and buying another. I applied and was accepted for Homebuy. Luckily over 4 years I have accrued some equity and now have a good deposit for the next purchase.
The homebuy IFA "specialist" turned out to be pretty useless. I was horrified at the terms and conditions of the options availalbe.
In the end a fellow MN friend offered for her Mortgage Consultant dp to contact me and he got me a high st mortgage with Abbey independent of any of the schemes. It is interest only but fixed for 2 years and my outgoings will be less than they currently are. Hopefully when the fixed term ends I can switch onto a repayment mortgage.
My advice would be, explore all your options very very carefully. Talk to a couple of IFAs, check out the websites, contact your local HAs etc.
If you can manage HomeBuy I think it's a better option but HA part-buy/part-rent is good for getting your feet on the ladder.
Ultimately tho, I find it ridiculous that lenders are happy to finance part-buy/rent mortgages in the knowledge that you'll have at least £300+ extra on top of the repayments but they won't actually lend an amount that equals your total outgoings as a repayment amount iyswim.
As I said, my outgoings at the start were around £750 and are now £900+ but at that time my max mortgagable amount was £110k which wouldn't have got me a studio flat in my area!
HTH and good luck!