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Q.What is New Build HomeBuy?
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A.
You buy a share of a property and pay rent
to a housing association on the remaining share that you do not
own.
In most cases you can buy further shares of
the property until you own the whole property. (Some rural
properties are restricted so that you can only ever own 80%).
New Build HomeBuy is also known as shared
ownership or part buy/part rent.
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Q.Who can buy through the New Build HomeBuy scheme?
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A.
The scheme is intended for people who cannot
afford to buy a suitable home without assistance. They must
be in housing need and be unable to afford an outright
purchase.
Priority is usually given to existing social
housing tenants or people on the local authority or housing
association waiting lists.
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Q.Can I buy through New Build HomeBuy with someone else?
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A.
Yes - up to four people can become joint
owners but all joint applicants must individually and jointly meet
the eligibility criteria.
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Q.I can afford to buy more than 75% of the property. What are my options?
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A.
If you can afford more than 75% of the
property value, you will not be eligible for any New build HomeBuy
properties.
However, we do offer properties (often on
the same developments) available to purchase outright. Take a look
at our Astral Homes
website for more information.
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Q.What kind of property can I buy through New Build HomeBuy?
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A.
Either new properties being built by a housing
association or existing New Build HomeBuy properties that become
available for resale.
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Q.How does New Build HomeBuy work?
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A.
You purchase a share of a property from
either the existing shared owner or directly from the housing
association if it is a new property. You will need to
arrange a mortgage to buy the share.
The share purchased will depend on what is
being offered and what you can afford but will range between 25%
and 75%. Existing shared owners will be selling the share that they
own.
You will pay rent for the share that you do
not own. If you buy further shares your rent will reduce.
You will be given a lease that will set out
your rights and responsibilities as a shared owner.
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Q.What is the New Build HomeBuy lease for?
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A.
The lease entitles you to live in the
property as owner-occupier for the length of the lease. It
will entitle you to buy further shares in the property and sets out
how you can do this. It also outlines how you can sell your
share.
Other points in the lease outline your
responsibility for repair and maintenance of the property and for
payment of rent and service charge.
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Q.What are the initial costs of buying a home?
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A.
You will need to give careful consideration
to the cost of paying a mortgage and rent as well as the additional
costs for repairs and maintenance. You will require savings
to pay the costs of the purchase and will then need to furnish your
new home.
You will also need money for:
- Legal Fees – for example a solicitor or
conveyancer to undertake the legal work.
- Deposit – if required.
- Stamp Duty Land Tax - no stamp duty is
payable on shares purchased up to a value of £125,000 or where the
full market value is £250,000 or less. Ask your solicitor for
further details as Stamp Duty rates vary from time to
time.
- Removal costs – if you are moving from
another property.
- Furnishing costs – if this is your first
home.
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Q.What are the likely running costs of a new home?
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A.
- Mortgage repayments – repayments will vary
according to the lender and the current interest rates.
- Rent – the monthly rent will be based on the
share you do not own. The percentage paid will be reviewed each
year.
- Council Tax – you will have to pay council
tax to the local authority.
- Repairs – if you have purchased a house, you
will be responsible for all repairs and redecoration, both internal
and external. If your home is a flat, you will be responsible
for all repairs and redecoration internally. Your landlord
will undertake to keep the external building in good repair and
will maintain communal areas. You will have to pay a share of
the costs involved. This is called a service charge.
- Insurance – your landlord will insure the
structure of your home (buildings insurance) but you will need your
own contents insurance.
- Heating, lighting and water bills – you are
responsible for your own bills.
- Fittings and furniture – you are responsible
for supplying your own fittings and furniture.
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Q.How do I buy a New Build HomeBuy home?
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A.
New properties
- Potential purchasers are sometimes identified
by the local authority from their housing list. We will also
consider applicants who have applied directly to us or who have
applied via the HomeBuy agent.
- Details of the new properties will be sent to
potential purchasers with a clear indication of what to do
next.
- Applicants may be interviewed by us.
- If you are offered the opportunity to
purchase a new home, you will need to arrange for a mortgage to pay
for the share you are buying and you will need to appoint a
solicitor to handle the legal matters.
- We will supply you with details of the
proposed lease; the valuation of the property; details of the rent;
notice of any service charges and the proposed date for the
completion of the property.
Resales
- Properties becoming available through resale
are usually offered to applicants selected from the local
authority’s housing list. Alternatively, applicants who have
approached the housing association directly may be
considered. If a purchaser cannot be found, then the property
may be offered for sale through a local estate agent.
- If you agree to purchase the share offered
for sale, you will need to arrange a mortgage to pay for the share
and you will need to appoint a solicitor or conveyancer to handle
the legal matters.
Buying further shares
- Details of the procedure will be in your
lease.
- You will need to tell your landlord that you
wish to purchase additional share.
- Your property will be valued to determine the
cost of the extra share. You will have to pay the valuer’s
fee.
- You will have three months after the
valuation to arrange an additional mortgage and to complete the
purchase of the additional shares.
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Q.Can I make improvements or alterations to my home?
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A.
You must ask your landlord for written
consent to the improvement or structural alteration that you want
to make.
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Q.What happens if I fall behind on my mortgage repayments?
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A.
If you begin to have financial problems
which mean you cannot pay your mortgage, you must let your mortgage
lender know as soon as possible. If you cannot agree on a
solution with your mortgage lender there is a risk that they will
take possession of your property and will sell it to recover the
money owing to them.
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Q.What happens if I fall behind on my rent or service charges?
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A.
Under the terms of your lease you are
legally obliged to pay the rent and service charge. As soon
as you realise that you have a financial problem contact your
landlord to see what they advise.
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Q.What do I do if I want to sell?
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A.
You may sell your share at any time but you
must tell your landlord that you want to move. Your lease may
have clauses that allow your landlord to nominate a prospective
purchaser and you may be required to have your property valued to
determine the sale price of your share.
You can buy all the remaining shares in the
property yourself and then sell the property outright unless you
live in a rural area and are not allowed to buy 100% of the
share. This detail will be in your lease.
You will benefit from any increase in the
value of the shares that you own but you must be aware that you
will also be affected if the value of your share falls.
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Q.Will I be able to obtain a 100% mortgage?
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A.
The availability of mortgages is changing on
an almost daily basis. At the time of writing, there are few
100% mortgages available.
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Q.Why do I need a deposit?
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A.
As there are few 100% mortgages available, it
is likely that you will need a deposit of 10% or more (of the share
you are purchasing) in order to obtain a mortgage.
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Q.Where do I get a deposit from?
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A.
Depending on the price of the
property and the share you are purchasing, you may be able to
cover the deposit from your savings. Alternatively, many
purchasers ask friends or family if they will gift/ lend the money.
You will not be permitted to secure this money by way of a second
charge over the property nor will you be able to take out a loan to
cover the deposit as this may affect your ability to obtain a
mortgage.
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Q.How much deposit will I need?
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A.
The level of deposit you need depends on the cost of the share
you are purchasing and the mortgage you have chosen.
For example, if you purchase 25% of a property worth £150,000
with a 90% mortgage, a 10% deposit would be £3,750.
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Q.What about the £3,500 savings that I need?
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A.
The £3,500 is needed to cover purchasing
costs, including:
- Solicitor’s Fees
- Land Registry Fee
- Disbursements, such as Local Authority and
other Searches
- Valuation/Survey Fee
- Mortgage arrangement Fee
A small deposit on exchange (£1,000-£2,500)
will be used as security if you did not proceed from exchange of
contracts to completion.
If the whole £3500 is not needed, the balance
could be put towards the deposit for your mortgage.
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Q.I have my own independent financial advisor. Why do I need to use yours?
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A.
Purchasing a home is complicated and likely to
be your single largest investment so it is important that you have
all the relevant information on which to make an informed
decision.
We recommend that you seek specialist
financial advice - Housing Association personnel are not qualified
to offer or provide financial advice. We do have an
experienced panel of advisors who will be able to advise and assist
you in obtaining a specialist shared ownership mortgage. You are
free to choose who arranges your mortgage. However, choosing an
advisor from our panel should make your application proceed more
smoothly and quickly as they have wide experience of all mortgage
products available to shared owners.
By going through a financial advisor who is
experienced in shared ownership you may also be able to get access
to more suitable mortgage products than you could by going direct
to a high street bank/building society. For example some
lenders offer mortgages exclusively through brokers or
advisors.
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Q.Will a bad credit history or County Court Judgements cause me problems?
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A.
It is increasingly difficult to obtain a
mortgage if you have adverse credit. The best action here is to
contact one of our financial advisors and discuss your situation,
giving them all the relevant information at the outset so they’ll
be better equipped to offer suitable advice. They will probably ask
you to get a copy of your credit rating from a company such as
Experian or Equifax.
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Q.I have an Individual Voluntary Arrangement. Will I get a mortgage?
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A.
You are likely to have difficultly obtaining a
suitable mortgage. However, as every situation is different, it is
best to contact one of our financial advisors and discuss your
situation with them.
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Q.I earn less than the minimum salary. Does that mean I'm not eligible to purchase?
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A.
Not necessarily. You may be able to purchase a
smaller share or, in some situations, applicants have a lump sum of
money to put down. This should be discussed with our
financial advisor when you have your initial financial
assessment.
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Q.I don't think I can afford to buy at the minute. Are there other options?
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A.
We may still be able to help you even if you
cannot afford to buy at this moment in time.
There may be the option to rent the property
at a discount and then purchase a share in the property at a later
date. This is only available on selected properties.
Alternatively, we could also add your details
to our database to ensure that you are sent information on future
properties.
Either way please contact us and we’ll happily
discuss options with you.