There are a few schemes that can help people who want to buy their home but can’t afford a full mortgage or may not be able to pay a 10% deposit. Think very carefully before buying a home under these schemes. You can lose your home if you don't keep up with your mortgage payments. Home ownership isn’t the best housing option for everyone.
Co-ownership allows you to part-buy and part-rent your home. The scheme is managed by the Northern Ireland Co-ownership Housing Association (NICHA). You must buy at least 50% of the value of the property, through a mortgage. You pay rent on the remaining value of your home.
You can apply to buy a home through co-ownership if
- you are over 18
- you could not afford the property without using the co-ownership scheme
- you don’t own any other property and you don’t have any unpaid debt relating to an old mortgage or secured loan
- the property you wish to buy is not a Housing Executive or housing association property
- the property you want to buy is not valued at more than £175,000
There are 9 starter shares available for homebuyers, with a minimum of 50% and a maximum of 90%, in steps of 5%. You can buy as much as you can afford initially, up to 90% of the property value.
You will have to pay a monthly mortgage on the part of the property you own. You have to pay rent to NICHA for the share of the property they own. You are responsible for all repairs in the property.
Increasing your shares in a co-ownership property
Once you’ve bought a share in the property, you can increase how much of the property you own. This is called staircasing. It allows you to purchase further shares in the property in steps of 5% up to a total of 90%. The amount you’ll pay for each 5% step will depend on the market value of that step when you apply to buy further shares.
If you made improvements to your home since you originally bought it, make a list of the works you carried out. NICHA will not include these improvements in the valuation. You don't pay more just because you’ve improved your home and increased its value.
When you increase the amount of the property you own your mortgage will also increase. However, the amount of rent you have to buy to NICHA will decrease. You can sell your home, but NICHA needs to agree on the sale price.
Affordable homes loan scheme
Most shared ownership housing in Northern Ireland is managed by the Co-ownership Housing Association. However, the government has now made loans to 3 other housing associations to allow these associations to build or develop affordable homes for sale. The housing associations who are part of this scheme are Clanmil, Apex and Oaklee.
Only certain homes in developments managed by Clanmil, Apex and Oaklee can be purchased using this scheme. You'll be able to buy up to 90% of the house and you will rent the remainder from the housing association. Clanmil is currently offering properties in the Mountview area of Lisburn, which should be completed by Spring 2015. These are the first properties offered as part of this scheme, but more will be released in the coming months. To find out more, get in touch with Oaklee, Clanmil or Apex.
Help to buy scheme
This scheme intends to make it easier for people who only have a 5% deposit to buy a house. The government offers a guarantee to lenders that they will insure 15% of the value of the mortgage if the home buyer fails to pay and the property is repossessed.
This scheme doesn’t offer money or a loan to people looking to buy a property. To use the scheme you will need to have a 5% deposit and pass all the credit checks that lenders use before they offer a mortgage. Not all banks in Northern Ireland offer mortgage under this scheme.
Before deciding to use a Help to Buy mortgage get some independent financial advice. There may be better deals available.
Help to buy ISA
First time buyers will be able to open a Help to Buy ISA to save towards a deposit. If you save in this type of account, you could be entitled to a tax free bonus payment from government when you buy a home. The maximum bonus paid for each account is £3000 and you can only open one account. If you have a partner, your partner can open his or her own account and will also be entitled to the bonus payment.
The maximum amount that you can save in this ISA is £200 per month. However, you can open the account with an extra lump sum of £1000, potentially saving a total of £1200 in the first month. The government will pay you 25% on top of your savings, as long as these are over £1600. The maximum bonus payment that the government will pay out on any one account is £3000. The bonus will be paid when you buy a property. Banks, including the Ulster Bank, will begin providing these ISA accounts in December 2015. Find out more about the Help to Buy ISA on the gov.uk website.
Right to buy
Most Housing Executive and housing association tenants who have lived in their home for more than 5 years have a right to buy that home at a sizeable discount.
There are some restrictions on this scheme. If your home is a ground floor bungalow or has been specially adapted for someone with a disability you may not be able to buy it.
Once you buy your home under this scheme you’ll be responsible for all repairs and maintenance and you won’t be included in any group repair schemes, such as new heating installations or window replacements.
Find out more about your rights to buy as a Housing Executive or housing association tenant.