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How to Buy a Home in Coventry With a 5% Deposit | Mortgage Market Update 02/10/20

Mortgage Advice in Coventry

The mortgage market is still recovering from the effects of the coronavirus. It’s still very difficult to get a 95% mortgage (5% deposit) as lenders are only really looking for 90% or less. However, due to the latest mortgage market update, there are a couple of ways around this that can help you get a 95% mortgage. As an expert Mortgage Broker in Coventry, we are here to tell you how you can get a 95% mortgage using the Help to Buy Equity Loan or the Shared Ownership scheme:

How to Buy a Home With a 5% Deposit | Shared Ownership & Help to Buy Equity Loan UK

Help to Buy Equity Loan

The way the Help to Buy Equity loan scheme works is that you put down a deposit of 5% or more and then the government will loan you the remainder to make up a total of a 25% deposit. This means that the government own a 20% stake in your new home. Along with your mortgage, you will have to pay off this 20% equity loan. For the first 5 years of you living in the property, this loan will be interest-free. If you haven’t paid it off within these 5 years you will start receiving interest on it; this will start at 1.75%.

So you can buy a home under the roof of this scheme, although, there are some rules that come with the Help to Buy Equity Loan scheme that you need to meet in order to qualify for it:

  • The scheme is only accessible on newly built properties only
  • The maximum purchase price is £600,000
  • You can only own this property
  • You have to be buying the property for purely residential use only and not as a Buy to Let

If you take these points into account, do you think that the Help to Buy Equity Loan scheme could be right for you? If so, it could be time to jump at the opportunity and get yourself started on your Help to Buy journey. You can do this one of two ways, either by yourself or with a professional Help to Buy Mortgage Broker in Coventry. Getting Help to Buy Mortgage Advice in Coventry could take all of the stress off your back. An Advisor will guide you through the whole process and fully explain everything that is going on at every stage.

Shared Ownership

You can also get yourself onto the property ladder with a 5% deposit through the Shared Ownership scheme. The Shared Ownership scheme allows you to purchase a percentage of your mortgage and then pay the rest on rent. The percentage that you can buy is normally between 25%-75%. Essentially, you and the government share the property; your share percentage in the property can be increased at any time.

Just like the Help to Buy Equity Loan scheme, you will have to meet certain requirements to access the Shared Ownership scheme. Here are the rules that you will need to adhere to in order to qualify:

  • You can’t have a household income of more than £80,000 per year
  • Can only access if you can’t get a mortgage any other way
  • You need a good credit history
  • You can only own this property

If you are struggling to obtain a normal mortgage, the Shared Ownership scheme could be for you. Also, getting expert Mortgage Advice in Coventry could help you get started with your Shared Ownership mortgage.

Summary

Your options may be limited with a 5% deposit, however, the Help to Buy Equity Loan Scheme and Shared Ownership Scheme are definitely two routes to consider. Despite the fate of the mortgage market being up in the air, at the moment these schemes are still available and could help you obtain a great mortgage deal.

If you want to start your mortgage journey, it could prove beneficial to approach a Mortgage Broker in Coventry, particularly in this day and age. You want to have the best chances in your mortgage application being accepted so approaching a Help to Buy and Shared Ownership specialist could be the best option for you.

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UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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