A guide to Help Buy Schemes in St Albans

If you want to buy a property in St Albans there are a number of Help to Buy schemes that could make the process a little more affordable. Below we explain some of the key Help to Buy schemes available for buyers in St Albans.

Help to Buy: Equity Loan  

What is the Help to Buy: Equity Loan scheme?

The Help to Buy: Equity Loan scheme came into effect in England in April 2021. It was set up to help first-time buyers get onto the property ladder and it includes fixed limits on the maximum you can borrow based on where you live in the country. Applications can be made up until March 2023 and you can receive up to 20% of the value of a new build property.

For St Albans (which falls into the southeast category) the property value limit is currently £437,600.

So, for example, if you want to buy a new build home in St Albans that is selling for £500,000, the maximum loan you can apply for is £87,520, which is 20% of £437,600.

You would then need to secure a mortgage valued at £412,480.

Who can apply for the scheme?

To apply you must be:

  • 18 years old or older
  • A first-time buyer

You should not make an application if you:

  • have previously or currently own a home or land anywhere else in the world
  • live with, or are married to, someone who owns or has owned a home or land anywhere in the world
  • own a home that was inherited or purchased with other people
  • buy another home other than this one
  • previously took out sharia mortgage finance

You can make an application at any time, although you may pay less for an equity loan taken out between January and March, compared to the rest of the year.

Help to Buy: Mortgage Guarantee  

What is the Help to Buy: Mortgage Guarantee scheme?

The Help to Buy: Mortgage Guarantee scheme was launched in April 2021 with the intention of helping property buyers find the 5% deposit required to apply for a 95% Loan-To-Value mortgage. It will be available to everyone until the end of December 2022.

The scheme was launched as a response to the effects of COVID-19 and to encourage lenders to offer 95% Loan-To-Value mortgage products, as most low-deposit mortgages had disappeared from the market.

How does the scheme work?

If you can raise the 5% needed for the property you wish to buy, you can apply for a 95% Loan-to-Value mortgage using any lender. Because it is a government-backed scheme, the lender will have a certain percentage of the loan covered in the event of repossession, which reduces their risk.

You can use the scheme to secure a 95% mortgage on new build and existing properties priced up to £600,000.

If you wanted to buy a property in St Albans valued at £600,000, you will need to raise a deposit of £30,000, with the rest repayable through the mortgage.

Who can apply for the scheme?

To apply for the Help to Buy: Mortgage Guarantee scheme you must be:

  • a first-time buyer
  • unable to afford a new home

You cannot use the scheme to buy a second home or for buy-to-let purposes.

Shared Ownership  

What is the Shared Ownership scheme?

Shared Ownership is a scheme that enables you to buy a share of your home if you cannot afford a mortgage that covers 100%. You can buy a share worth between 10% and 75% of the property’s value and pay rent of up to 3% on the remaining amount. If you are able to afford more at a later date, you can then buy a larger portion of the shares.

As an example, imagine you want to buy a 30% share of a £300,000 property in St Albans, which would be £90,000.

If the housing association charged rent at 3%, you would have to pay rent amounting to £6,300 across the year (which is 3% of the remaining £210,000), or £525 each month.

This would be in addition to any mortgage repayments that have to be made each month if you have borrowed money to pay for the 30% share of the property.

Who is eligible for the Shared Ownership scheme?

To qualify for the scheme you must be:

  • a first-time buyer, own a property but cannot afford to buy a new one, or be an existing shared owner
  • have a household income of less than £80,000

You can use the scheme to buy a new build home or an existing property made available via a housing association. The mortgage you take out should be used to pay for your share of the purchase price. If you are in the military, you will be given priority over other groups applying for the scheme.

To start your application, contact the nearest Help to Buy agent in your area.

First Homes

What is the First Homes scheme?

The First Homes scheme launched at the start of June 2021 and exists to help first-time buyers and key workers secure their own property. It works by offering homes that are 30% cheaper than current market prices. This can make it easier to raise the initial deposit and make mortgages more attainable for many who would otherwise not be able to afford them. This isn’t a limited time offer, as the discounts will always apply to the homes, passing it on to whoever buys the property when it is next sold.

However, the property can only be sold to another first-time buyer who is also eligible for the scheme and it must be with the same discount percentage you received.

For example, if you purchased your home with a 30% discount, you also have to apply the same discount against the market value at the time of selling.

Who is eligible for the First Homes scheme?

If you want to apply for the First Homes scheme you must:

  • live and work in England
  • be a first-time buyer with a household income no higher than £80,000
  • have local connections and/or hold key worker status
  • not be the owner of any other home
  • use a mortgage or home purchase plan valued at least 50% of the purchase price

After the discount has been applied, the property can be sold for a maximum of £250,000. This price cap can also be lowered by the local authority.

How do you apply for the scheme?

The first thing to do is to check that the building company offers the scheme for the development you are interested in. If they do then you have to apply directly through the builder. First Homes will be available on a limited number of plots on most new property developments.

There is no application deadline so as long as a relevant plot is available, you can apply. Before you can reserve a plot on any development your eligibility will first have to be confirmed.

Looking to buy a property in St Albans?

Whether you’re looking to buy an existing or new build property in St Albans, Daniels Estate Agents can help. We have over 25 years of experience in the St Albans property market helping buyers find their ideal home. Contact our friendly team today or browse our available properties for sale online. For details of new homes and developments in St Albans, click here