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Examples of affordable housing schemes

Exorbitant house prices in the UK have prompted the government and housing companies to come up with various schemes to provide affordable housing. These schemes give key workers and other low income earners an incentive to get homes at reduced price. The affordable housing schemes are not reserved for people with low incomes. Anyone who qualifies can join the scheme. You can find out if you qualify by contacting the local housing association. The schemes range from joint property ownership to loans that help people buy homes. These programs are meant to get people to buy and not to rent houses from Social Housing Providers. The houses meet the high standards of construction and are very energy efficient. The houses are usually found in areas with new housing developments.

Shared ownership schemes

Shared ownership scheme allows a buyer to co-own a house with a Housing Association. The buyer buys 25% to 75% of the house at reduced rates. The remaining percentage is owned by the Housing Association. The buyer is required to pay the Housing Association annual rent that is based on the amount of share the Association claims on the property. The amount of rent varies from place to place and is also determined by the size of the house. The annual rent cannot exceed 3% of the share owned by the Housing Association.

A prospective buyer of shared ownership property can fund the purchase from his own pockets or seek help from mortgage lenders. The mortgage lender must know the type of property ownership that the buyer is getting into. Sale of shared ownership properties follows the rules and principles of conveyance. The buyer is therefore required to hire a solicitor to help him with conveyance.

A buyer can increase the amount of his shares on the property after he purchases it. He does this by buying more shares from the housing association until his shares reach 100%. This is called staircasing. Outright purchase of shared ownership properties is not allowed by law. This is to keep the property available to other people who are interested in affordable housing.

Equity loans

You can also buy affordable houses using equity loans. Equity loans are in many ways similar to mortgages. They are used to buy properties but must be refunded after a given period of time. The difference between equity loans and mortgages is the criteria for getting loans and the arrangements for paying refunds. Equity loans are only available for new homes. They cannot be used to purchase pre-existing properties.

To get an equity loan, you have to apply to the Home Buy Agents. You must have a deposit of 5% and a mortgage of up to 75% to qualify for the loan. The balance of the price of the house is paid for by the equity loan. The percentage of equity loan you are given becomes a share of the property. This is the amount you have to repay to fully own the property. You are required to repay equity loan upon sale of the property or when the term of the loan expires.

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