Shared Equity

Shared equity schemes can be a fantastic way to step onto the property ladder, especially if saving up a large deposit feels overwhelming. Here's how they can benefit you:

1. Buy Your First Home Sooner:

Saving for a full deposit can take years and leave you feeling stuck. With a shared equity scheme, you can take this important step much earlier and start enjoying the benefits of homeownership.

2. Interest-Free Loans (Often):

Many shared equity loans are interest-free, at least initially. The amount you repay is usually based on your property's value, not interest. Even when interest is applied, it often isn't due for the first few years (like the five-year grace period with the old Help to Buy), giving you some financial breathing room.

3. Repay When You Sell (Often):

A lot of these schemes allow you to repay the loan only when you sell your home. This means you don't need to worry about adding extra monthly repayments to your budget.

There are a few things to keep in mind when considering a shared equity loan as part of your buying process:

1. Potential Increase in Loan Amount:

If your property value rises significantly, your equity loan could increase as well. This means you might end up owing more than if you had saved the additional money yourself. However, it's important to remember that saving the full amount could be challenging in a rising property market.

2. Limited Home Choices:

Shared equity loans are typically available for new builds, which might limit your choices. You may not get your dream home or the exact location you desire. But owning a home often brings more stability and benefits compared to renting.

3. Challenges in Re-Mortgaging:

Re-mortgaging can be tricky if you haven't paid off the equity loan, as some lenders might not accept your application. The good news is, a broker can assist you in finding the right deals tailored to your situation.