FirstBuy Equity Loans
What is FirstBuy?
FirstBuy is the brand new low cost home ownership scheme aimed at helping working people get a foot on the housing ladder. Similar to the last government’s popular HomeBuy Direct initiative, it offers eligible buyers a 20% equity loan, funded jointly by the Homes and Communities Agency (HCA) and house builders across the UK.
How does it work?
For the first five years of FirstBuy home ownership you will not have to pay any fees. Then after five years, you will pay a fee to the National HomeBuy Agent of 1.75% per annum on the outstanding loan. This fee will increase each year by RPI (Retail Price Index – the general measure of inflation) plus 1%. To buy with FirstBuy you will need savings (a minimum of a 5% deposit on the share you are buying) and a mortgage to meet a minimum of 80% of the value of the home you want to buy. The rest of the purchase price of the home will be paid for by FirstBuy. For a full explination and buyers guide follow HomeBuy Buyers Guide.
Around 124 house builders nation-wide bid for FirstBuy funds, with developments in the northwest and South Yorkshire HomeBuy and South East scooping a sizeable chunk of the funding.
Properties can be applied for as soon as they are on our website - search today to see what is available. After 12 months of ownership you can also choose to make part repayments (‘staircasing’) on your FirstBuy equity loan at the current market value at the time you wish to staircase.
If you have purchased a share of your home under the Shared Ownership or previously the NewBuild HomeBuy scheme, you are entitled to buy further shares if you can afford to. This is known as "staircasing". You don't need to buy the whole lot. You can acquire more shares in your home in small, manageable chunks. And you may be interested to know that buying outright may not cost as much as you think. In many cases, the cost of monthly payments on a 100% mortgage are only marginally higher than the combined shared ownership mortgage and rent you currently pay. We're working with independent financial advisers, to offer you free, impartial advice on buying more shares in your home. Though you will need to pay for a valuation and legal fees, there are lots of competitive deals out there at the moment to encourage outright ownership. So why not get in touch and find out about owning the whole of your home?
What is staircasing?
Most leases allow you to buy more shares in your home, until you own it outright. This process of increasing your share is called 'staircasing'. Once you own 100%, you will stop paying rent to the relevant Housing Association although there still may be an element of service charge to pay on some properties. The price you pay for each share depends on the value of your home at the time you want to buy. If you live in a house you will normally be granted the freehold title on your property, but in certain circumstances the association may only be able to transfer its leasehold title.
- You need to inform the relevant Housing Association in writing of your intentions, if you want to buy a larger share, or own your home outright.
- You need to appoint a qualified chartered surveyor to value your home.
- The relevant Housing Association requires the original copy of this valuation report. On receipt of this valuation, the Housing Association will write to you to confirm whether or not we accept the report as evidence of the properties deemed market value.
- Please inform your valuer of any improvements you have made to the property which may have affected the value of your home. The value of any improvements will not be taken into account by the Housing Association when calculating our expected return from the sale of equity.
- You then need to appoint a solicitor to act on your behalf. We need your appointed solicitor’s full details, so we can inform our solicitors. Both solicitors will then liaise to complete the necessary paperwork ready for the completion of the transfer. In the meantime, you will need to sort out your mortgage requirements.
- When we receive proof of your mortgage offer, we will then approach our regional manager for approval to dispose of the Housing Association's share in the property (Please note, this approval is carried out on a regular basis). On completion, the association requires its share agreed in point two.
The minimum additional repayment is 10% of the total market value. When you sell your home, you will repay FirstBuy from the appropriate share of the sale proceeds. For example, if your FirstBuy equity loan was originally for 20% of the full market value of your home and you had not staircased at any point; you would repay 20% of the full market value when it came to selling.
Who is eligible for FirstBuy?
To qualify, you must meet the following criteria:
- Your household income is less than £60,000 pa for applications for 1 & 2 bed properties and up to £74,000 pa for applications for family sized properties (3+ bedrooms).
- You are a first-time buyer, or a homeowner who needs to move because of a change in your family’s circumstances (in which case you must sell your existing property).
Priority will be given to:
- Social tenants - council and housing association tenants
- Serving Armed Forces personnel
- Other locally defined priority groups and first time buyers
Search for a property
FirstBuy is a government funded product. Funding is allocated via the Homes and Communities Agency and administered via a network of local HomeBuy Agents. The administration of FirstBuy is free of charge to applicants and all applications are processed in date order. Certain unofficial websites are promoting a fast track/priority service for FirstBuy at a cost to applicants. Please be advised that these websites are not part of the government scheme and do not work in partnership with the Homes and Communities Agency's network of local HomeBuy Agents. Your local Homebuy Agent is responsible for approving applicant eligibility and prioritising applicants. Please be advised that any payments for priority or fast track services is at an applicant's own risk and does not provide any further guarantees that you will be successful on the FirstBuy scheme. Your home is at risk if you do not keep up rent or mortgage repayments or payments of any loans secured on it. Please note that the value of properties can go down as well as up.