The Most Affordable House Buying Schemes to Use

There's plenty of talk about affordability when it comes to purchasing bricks and mortar. Buying a house or flat in the current market can still very much seem like a financial hurdle for many people. If you're dreaming of homeownership but have a shoe-string budget, know that there is help at hand. 

In a bid to help buyers, the government created several affordable homeownership schemes that can help you get a foot on the housing ladder. But before you search for properties for sale that may be beyond your budget, first decide on what, if any, house buying schemes suit you.

House Buying Schemes

If you have a limited budget, you may be wondering "how to buy a house?" and "how much deposit do I need?" Fortunately, there are many ways to buy a house with a financial boost to give you that step up.

Help to Buy: Equity Loan

This government-backed scheme helps first-time buyers move into a new abode with a much smaller deposit than is often required with traditional mortgages. The government provides an interest-free loan of up to 20% (or 40% in London) of the property value you intend to purchase. This means you only need to save for a 5% deposit and arrange a 75% mortgage (or 55% in London) instead of your typical 90% mortgage. 

To be eligible for the government Help to Buy scheme, you must:

• Be at least 18 years old
• Buy a new-build property in the UK
• Have at least a 5% deposit 
• Buy a property that is no more than £600,000
• Be able to afford the monthly mortgage payment
• Not own any other property or part-exchange your previous home
• Not rent out the property once you purchase it

Extended until March 2023, this scheme is for first-time buyers in England purchasing a new-build property.

Learn more about the Help to Buy: Equity Loan.

Help to Buy: Shared Ownership

This is a blend of buying and renting, making it an excellent choice for first-time buyers and those with lower incomes. How does Shared Ownership work exactly? Under the scheme, you own a share of the property (between a quarter and three-quarters) and then pay subsidised rent to a housing association on the share you don't buy. The most welcoming feature of a Shared Ownership Scheme is that you get to increase your percentage stake in the equity of the property over time, as and when you can afford to do so. 

To be eligible for the Shared Ownership Scheme:

• Your combined annual household income must be less than £80,000 (or £90,000 in London).
• You must be a first-time buyer or, if you have previously owned a home, you no longer own it. 
• If you are an existing Shared Ownership owner, you are able to sell your current home to buy an alternative property under the same scheme.
• Those older than 55 can buy up to 75% of a Shared Ownership home under the Older People's Shared Ownership scheme (OPSO). 

By part-owning the property, you will, therefore, require a smaller mortgage and a smaller deposit (10% of the share you are buying), making it a great option for those with a limited budget and small savings. Under this government-backed scheme, you start gaining equity even when you can't quite afford to buy a home outright yet. 

Find out more about Help to Buy: Shared Ownership. This scheme is only available in England, although Scotland, Wales and Northern Ireland run similar schemes.

Older People's Shared Ownership (OPSO)

This scheme helps people aged over 55 buy a percentage of a home, usually between 25% and 75%. As with other Shared Ownership Schemes, you pay proportional rent on the remainder. The greater the ownership share, the less in rent you have to pay. Once you own 75%, you no longer have to pay rent on the remaining 25%. 

Learn more about Older People's Shared Ownership.

Home Ownership for People with Long-Term Disabilities (HOLD)

For those with a long-term disability who are seeking to purchase a house, there is HOLD (Home Ownership for People with Long-Term Disabilities). Under HOLD, those with long-term disabilities receive help buying a home that is for sale on a Shared Ownership basis – part-rent, part-buy. You buy a share of your home, between 25% and 75% of the home's value, and pay rent on the remaining share. 

Individuals may only apply for the HOLD scheme if the properties available in other Shared Ownership schemes are not adequate for your needs – for example, you need a ground-floor property but only properties on upper floors are available.

Find out more about HOLD.

Right to Buy/Right to Acquire

If you're a council or housing association tenant in England, you could get help purchasing the property. Council tenants may be eligible for the Right to Buy scheme where you purchase your council home at a discounted price. The discount varies depending on where you live, how long you have lived there and whether it's a house or flat.

If you were living in the council home before it was transferred to another landlord (such as a housing association), you could be entitled to the Preserved Right to Buy or Right to Acquire schemes. Under Right to Buy, it’s possible to buy your home with a discount of up to £82,800 (or £110,500 in London). Right to Acquire tenants could get between £9,000 and £16,000, providing they are eligible.

Find out more about Right to Buy/Right to Acquire here. Keep in mind that Northern Ireland call this the House Sales Scheme and is for tenants who rent from the Northern Ireland Housing Execution or a housing association. 

Lifetime ISA

Saving for a deposit is one of the most difficult aspects of buying your own home. While not technically a scheme, a Lifetime Individual Savings Accounts (ISA) can certainly help those looking to save for their first property. It is a long-term tax-free savings account that can be used for those aged 18-39 to buy their first home or save for retirement. The government will give you a bonus of 25% of the money you put in, up to a maximum of £1,000 a year until you turn 50. Over time, these bonuses could give you a significant hand in helping you buy your first property worth up to £450,000.

Find out more about opening a Lifetime ISA account.

What's the difference between Shared Ownership and Help to Buy?

The Help to Buy Scheme and Shared Ownership schemes are very similar in the way that they help people get a foot onto the property ladder with a smaller deposit. The main difference between the two schemes is that you pay rent and mortgage payments with a Shared Ownership property, while you would only pay mortgage payments on a Help to Buy property. 

Find a property that suits your budget

Buying a home is no small feat. But Boomin aims to make it easier. Our property site is a smarter place to browse homes where you can book viewings online, day or night, 24/7 with a trusted Estate Agent. Take a look at our living database of homes for sale – including those not yet listed. Start your property search today.

Faye deGavre

Content Writer