Getting on the housing ladder is a real problem for thousands of people up and down the country – and it is especially difficult here in the South East.
The First Time Buyers Initiative (FTBI) is part of the government’s new ‘HomeBuy’ low cost home ownership initiative. The scheme applies to new build homes, and aims to make owning your own home more affordable. The way the FTBI works is simple. You buy your brand new home with an affordable mortgage and with government assistance. You have 100% ownership of your home and take out an affordable mortgage for a minimum of 50% of the full purchase price through a normal lender. The government then provides additional assistance to buy up to the full purchase price. Your mortgage repayments will be your only outlay for the first three years of ownership. After this time, the government (via a HomeBuy Agent) will charge a fee of 1% of the government’s contribution. This fee will rise to a maximum of 3% after five years in the property.
When owners sell their FTBI home, they will repay the government’s contribution by way of a share of the sale proceeds. So, if the government initially assisted the purchase with a 25% contribution, the repayment will be 25% of the total value when it is sold.
Staircase to full ownership
The FTBI is not only an affordable way of moving towards owning your own home; it’s also flexible enough to change with your personal circumstances. You can choose to repay the government and increase your share of future sale proceeds, at any time. The repayments are calculated at the current market value: this is called ‘staircasing’. For example, you may want to increase your future share of sale proceeds from 50% to 60% of the value of your home. The minimum additional purchase is 10% of the market value. By taking advantage of this opportunity, you’ll be taking real steps towards the benefits of full home ownership.
What if I want to move?
FTBI homes are also flexible enough to allow you to move home with the minimum of fuss. After the sale of your home, you’ll simply repay the government their % of the equity, based on the final sale valuation.
What do I do now?
If you’re finding it difficult to realise your dream of owning your own home, then an FTBI home could be for you. The FTBI scheme is underway now, and hopes to make new homes available nationally over the next four years.
Applications are welcome from prospective first time buyers who cannot afford to buy a suitable home on the open market. Certain other conditions will also apply, such as limits on household income. Please contact us for further details.
Applicants for FTBI homes must be able to demonstrate access to savings or sufficient funds to cover the costs of buying, which will include solicitor’s fees, stamp duty and, in some cases, a reservation fee or deposit.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. The FSA do not regulate some types of buy to let, commercial, overseas mortgages, and credit or loans not secured on property. Calls may be monitored and recorded for training / compliance purposes.
Neville Richards Financial Services Ltd is an appointed Representative of Intrinsic Mortgage Planning Ltd which is authorised and Regulated by the Financial Services Authority. Intrinsic Mortgage Planning Limited is entered on the FSA register (http://fsa.gov.uk/register/) under reference 440718.