Shared equity mortgages are increasingly popular, providing a way for many hopeful buyers to own a home. These schemes, often supported by house builders, local authorities, or government initiatives, aim to help first-time buyers get onto the property ladder.
Understanding Shared Equity Mortgages
Shared equity mortgages let homebuyers use a small deposit and get a smaller-than-average mortgage. They do this by getting an ‘equity loan’ that covers part of the property’s value. Usually, this loan comes from a third-party, like a housing association or government agency.
Repaying the Equity Loan
You pay back the equity loan after a few years or when you sell the property. Some schemes let you repay it gradually over time, while others need full repayment at a specific time, like when you sell the property or reach a certain equity threshold.
Value Changes
The value of the equity loan changes with the property’s value. So, how much you repay depends on the property’s value when you repay. If the property’s value goes up, you’ll have to repay more money.
Benefits of Shared Equity Mortgages
Lower Initial Costs: Shared equity mortgages let buyers get into the property market with a smaller deposit, making it easier for first-time buyers.
Smaller Mortgage: With an equity loan, buyers get a smaller mortgage, meaning lower monthly payments and better affordability.
Flexible Repayment: Many shared equity schemes offer flexible repayment options, making it easier to repay the loan over time.
Government Support: Lots of shared equity schemes have support from the government, making them more affordable.
Navigating Shared Equity Mortgages
While shared equity mortgages sound good, it’s important to understand how they work. Talking to a mortgage advisor can help you understand the terms and find the best solution for your situation.
Shared equity mortgages are a good way for many people to own a home, especially those who can’t afford a big deposit. They make homeownership more achievable and help you manage your money better. If you’re thinking about buying a home, look into shared equity options and find out more from Ingrid Cairns & Associates.
Your Home (Or Property) May Be Repossessed If You Do Not Keep Up Repayments On Your Mortgage. Some Forms Of Buy To Let Mortgages Are Not Regulated By The Financial Conduct Authority. A Fee May Be Charged For Mortgage Advice. The Exact Amount Will Depend On Your Circumstances But It Will Not Exceed £495.
