first time home buyer guide€¦ · first time home buyer guide 03 with the average house deposit...

First time home buyer guideGetting on the property ladder: your journey starts here.

Ready for that first homefeeling?

At Home Group, we believe that everyone has the right to own a home. We like to think our customers trust us because we work hard to make their journey to home ownership a happy and affordable one. And all of our experience (80 years of it, to be exact) goes into making that happen in every way possible. That’s why we’re super proud to be able to offer a range of home ownership schemes to first time buyers who need a little extra help getting on the property ladder.

Over the next few pages, we’ll take you through all the ins and outs of affordable housing and explain each of our schemes in a way that’s clear, simple and, well, just makes sense. No jargon, no fluff - just plain English. We’ll also get you up to speed with the all-important costs you’ll face as a homeowner, as well some extra tips and useful information to help you make the choice that’s right for you and your budget.

03First time home buyer guide

With the average house deposit now set at an eye-watering £33,000, buying your own home can seem like a far, far away daydream. But despair not, first time buyers: we’re here to help.

First time home buyer guide02

The cost of buying and owning a home p.04

Help toBuy p.14

Your first mortgage p.08

What’s in this guide04 The cost of buying and owning

a home06 Before you move in08 Your first mortgage 10 After you move in12 Affordable housing:

what you need to know14–19 New to Home Group? How to

get on the property ladder14 Help to Buy16 Help to Buy: London18 Shared ownership20–31 Already with Home Group?

How to get on the property ladder20 Home Group Deposit Builder22 Staircasing24 Right to Acquire26 Right to Buy28 Voluntary Right to Buy30 Budgeting tips32 Glossary

You’ve made the decision to buy your first home. Hurrah! You’re probably pretty keen to get things started and who can blame you? But before you do, it’s time to stop and ask yourself: “am I sure I can afford this?”Buying your first home is an exciting milestone but it can be a little daunting too. After all, your home is likely to be the most expensive thing you’ll ever buy! That’s why it’s so important you do your homework (no pun intended) and understand all the costs involved before leaping in.

We can help you understand which of our homes is right for you. To find out more get in touch with our friendly advisors today. If you are looking to buy a new build home call 0800 073 0600 or [email protected]. For all other enquiries call 0191 731 1445 or [email protected]

The costof buyingand owninga home

05First time home buyer guideFirst time home buyer guide04

Before you move in

Deposit

A deposit is the lump sum of money you pay towards the cost of your new home. It’ll normally be at least 5% of the value of the property that you’re buying. If £33,000 sounds a lot remember that’s the national average and it could be lower, or higher, depending where you live. There’s also a number of schemes to make saving up more affordable. And don’t forget, we can help you get on the property ladder with a smaller deposit.

Avg. Deposit in UK:

£33,000Avg. Stamp Duty in UK:

£3,500

Stamp duty

Stamp duty is a government tax paid on homes that cost £125,001 or more. The amount of stamp duty you’ll pay will depend on the value of the home you’re buying.

Avg. Legal Fees in UK:

£1,000

Legal fees

These are fees that will need to be paid to your solicitor to cover the cost of all legal work associated with buying your home. The fees will start when your offer on a house is accepted and will finish when you have the keys in your hand.

Avg. Valuation Fees in UK:

£250

Valuation fees

Before you can buy your home, it’ll first need a valuation survey to make sure it’s worth the amount you want to borrow - this is for loan security purposes. The fee amount will depend on your lender and home purchase price.

Other fees

You’ll also need to be prepared for a number of other small fees that might pop up along the way. These could include notice of mortgage fees, mortgage approval fees or a mortgage reservation fee, which some lenders require to secure a fixed-rate, tracker or discount deal.

Mortgage arrangement fees

Avg. Admin in UK:

£2,500

Mortgage arrangement fees refer to the admin costs of setting up the mortgage. It’s usually an upfront cost, but can also be added to your mortgage repayments with interest.

First time home buyer guide 0706 First time home buyer guide

There are a handful of upfront fees and payments you’ll need to budget for before you get started.*

*These are guide figures which could vary.

Find out how much you could borrow?


Use our Home Group Mortgage Calculator to work out how much you might be able to borrow: www.homegroup.org.uk/mortgagecalculator

??????Your first mortgage

Applying for your very first mortgage can feel like a big step. As with most things, it’s smart to go in knowing what - and who - to expect along the way.

Here’s a few of the key people (or the ‘mortgage VIPs’, as we like to call them) you’ll come across through the process…

Mortgage AdvisorOffers advice and support on different mortgage options to find the right deal for you.

Estate AgentArranges, manages and markets the selling or renting of your current home.

SolicitorHandles all the legal aspects of buying your new home or selling your current home.

SurveyorValues your current home and carries out an inspection of your new home for potential issues.

Home Group AdvisorProvides free information, advice and support throughout your home buying journey.

Independent Financial AdvisorCreates an overall financial plan and offers detailed financial advice tailored to your lifestyle and goals.

First time home buyer guide 0908 First time home buyer guide


Average UK household monthly running costs

Waterbill

£35

Council tax

£120

Maintenanceand building work

£50

First time home buyer guide

After you move inWith a new home comes new responsibilities. As soon as you have those shiny new keys in your hands, you’ll need to keep up with a number of ongoing monthly payments.

Mortgagerepayments

£660

Gas andelectricity bills

£95

Buildings and contents insurance

£25

Television, broadband and telephone bills

£50

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Where can I find affordable housing?The great news is that you can find our affordable housing properties just about everywhere! As one of the UK’s top providers of affordable housing, we offer a wide variety of homes in various locations, ranging from one bedroom apartments through to four bedroom family homes - all so we can meet each and every home buyer’s individual needs. After all, supporting you is what we do best. And we wouldn’t have it any other way.

Do I qualify for affordable housing?Put simply, affordable housing is available to people who can’t afford to buy a home. It all depends on your income and local house prices so there’s no ‘one size fits all’ answer here but, generally speaking, if you earn below the national average wage then you could qualify for a helping hand when buying your first home.

Affordable housing: what you need to know

What is affordable housing?If you’ve been thinking about buying your first home, you’ve probably come across the term ‘affordable housing’ at some point. Affordable housing refers to homes that are offered for sale or rent at a price below their market value. There are lots of schemes included under affordable housing, which you can find over the next few pages.

To explore our range of home ownership schemes, please visit: www.homegroup.org.uk/buyahome

A deposit is the lump sum of money you pay towards the cost of your new home. It’ll normally be at least 5% of the value of the property that you’re buying. If £33,000 sounds a lot remember that’s the national average and it could be lower, or higher, depending where you live. There’s also a number of schemes to make saving up more affordable. And don’t forget, we can help you get on the property ladder with a smaller deposit.

New to Home Group? How to get on the property ladder

Heard of Help to Buy but not sure what it’s all about? Don’t worry, we promise it’s not as confusing as it first seems. Help to Buy is a popular government-backed scheme that helps first time buyers get their first home

with just a 5% deposit. You just need to take out a mortgage for 75% of the value of the house and the remaining 20% will be funded by the government. You won’t be charged any interest on that loan for

the first five years of home ownership, after which point you’ll be charged a fee of 1.75%. This will increase by 1% each year. Once the property is sold, all you’ll need to do is repay the loan from your property’s sale value.

Help to Buy

Ideal for: First time buyers or existing home owners who have found their dream home but can’t afford the full deposit.

Do you qualify for Help to Buy?

You have a 5% deposit available.

You want to buy a new build home in the UK.

You are able to take out a mortgage for 75% of the value of the home.

You can afford the monthly mortgage repayments.

The home you buy under the scheme is your only residence.

You are not a buy-to-let investor and will not own any other property after completion.


£300k Example House Value

£15kBuyers 5% deposit

£60kGovernment’s 20% loan

£225k75% mortgage from commercial lender


To find out more about Help to Buy visit www.helptobuy.gov.uk


When will I need to pay back the full loan?Although you’ll start paying interest on the equity loan after the first five years, you won’t actually need to repay it in full until you either sell up or come to the end of your mortgage term – whichever comes first.

What happens when I want to move?If you want to sell your Help to Buy home, you’ll need to repay the loan you received to buy it. The repayment amount will be based on the market value of your home when you sell it.

Where does the funding for the Help to Buy come from?All Help to Buy schemes are funded by the Government through Homes England.

Help to Buy FAQs

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With ever-increasing house prices and sky high deposits, London is filled with people who can’t afford to buy the homes they rent. That’s why the government has introduced a London-specific Help to Buy scheme for house hunters in the capital, which increases the upper loan limit

from 20% to 40% for homes in all London boroughs.

So, if you put down a 5% cash deposit then you’ll only need a 55% mortgage to become a homeowner in London. Just like the standard Help to Buy scheme, there are no fees payable on this loan for

the first five years of home ownership, after which point you’ll be charged a fee of 1.75%. This will increase by 1% each year. Once the property is sold, all you’ll need to do is repay the loan from your property’s sale value.

Help to Buy: London

Ideal for: First time buyers or existing home owners who have found their dream home in London but can’t afford the full deposit.

You have a 5% deposit available.

You want to buy a new build home in London with a maximum value of £600,000.

You are able to take out a mortgage for 55% of the value of the home.

You can afford the monthly mortgage repayments.

The home you buy under the scheme is your only residence.

You are not a buy-to-let investor and will not own any other property after completion.

Do you qualify for Help to Buy: London?

Being able to purchase this home through the Help to Buy scheme has been a great help – I only needed to find a 5% deposit, and the process has been simple with Home Group explaining the process to me, letting me know what I needed to do and when.

Yusef


£190mortgage payment**

£41service charge

£273rent

25%

* Based on 4 bed house in Scarborough ** Based on mortgage payment calculated at 4%

Example costs for a customer with a 25% share of a £175k home*

To check your eligibility and discuss shared ownership with one of our advisors contact us today on 0800 073 0600.

First time home buyer guide18 19First time home buyer guide

Another great way to get your foot on the property ladder is through the Home Group shared ownership scheme. This popular scheme lets you pay for a share of your home and only pay rent and service charges for the share you don’t own at a reduced rate.

Think of it as a stepping stone to completely owning your own home - you start off buying a share (usually between 25 – 75%) in your new home on a leasehold basis. If you’re not sure what a leasehold is our glossary at the end of this guide can

help. As time goes on, you can then buy more shares when you can afford it, gradually increasing the percentage you own until you become a full owner - this is known as ‘staircasing’ (see page 24).

Shared ownership

Ideal for: Aspiring homeowners who are unable to buy a home outright and would rather buy what they can afford, when they can afford it.

You don’t currently own a home, or have an interest in a home and can’t afford to buy one outright.

You have at least a 5% deposit available for the percentage of the home you’d like to purchase.

Your combined household income is less than £80,000 (or less than £90,000 in London).

You can afford the monthly mortgage, rent and service charge payments.

Do you qualify for shared ownership?

Buy a share of the property,

between 25% – 75%

Pay rent and service charges

on the share you don’t own

How it works

Once I have shared ownership, can I ever fully own my home?Yes! If you decide to purchase the remaining share of your home then you will own it outright.

What happens if I want to sell my shared ownership home?You can sell your shared ownership home at any time. You can either sell the share you own to someone we nominate or you can buy the remaining share and sell the property if the lease allows. You will benefit from any increase in your home’s value according to your share.

What costs will I be responsible for as a shared ownership customer?As a shared owner, you will have the same rights and responsibilities as a full owner-occupier. That means you’ll sign a lease that requires you to be fully responsible for all the costs of your property, including repairs, regardless of the percentage of the property that you originally bought.

Shared ownership FAQs

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25% =£43,750

Your total monthly cost

£504

If you’ve opened a Help to Buy ISA, you might be able to boost your savings even further with our Deposit Builder pilot scheme. Just as it says on the tin, Deposit Builder can help existing customers build up enough money for a deposit:

• We’ll match your government Help to Buy ISA bonus cash.

• We’ll offer you a discount of £50.00 from your monthly rent payments.

Any Home Group customer can apply for the pilot scheme but only some properties will be available to buy due to specific legal restrictions (such as charity law and lending restrictions).

Home Group Deposit Builder

Ideal for: Existing customers who need extra help raising a deposit to buy their current Home Group property.

You’ve completed a starter tenancy of 12 months with Home Group or another public sector landlord.

You intend to buy your current home or another Home Group property.

Your rent account is up to date with no arrears.

You have a good credit history and no current or pending other debt issues.

There are no court proceedings about to be issued to you or any other customer on your tenancy.

You don’t claim (or intend to claim) housing benefit or Universal Credit.

Do you qualify for the Home Group Deposit Builder?

Can any Home Group customer apply for Deposit Builder?Technically, yes. However, only certain properties will be available to buy due to specific legal restrictions (such as charity law and lending restrictions).

Do I have to buy the property I live in?Not necessarily. You can put your Deposit Builder savings towards your current home if it is eligible, or put it towards another eligible Home Group property.

How is Deposit Builder regulated?Deposit Builder isn’t a regulated financial product which means Home Group won’t hold your savings at any point. Banks and financial institutions that provide Help to Buy ISAs are usually regulated by the Financial Conduct Authority.

Deposit Builder FAQs

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For more information about the Home Group Deposit Builder, please visit: www.homegroup.org.uk/depositbuilder


To check your eligibility and discuss the Deposit Builder scheme with one of our knowledgeable and experienced advisors, contact us today on 0191 731 1445.

87% of Home Group customers want to be able to buy their own homes.

Already with Home Group? How to get on the property ladder

Staircasing is a great way to help you get you to the top of the property ladder, one affordable step at a time.

Staircasing helps our shared ownership customers continue to buy more shares

and own more of their home. The more shares you buy, the less rent you’ll pay. Bear in mind that you’ll need to pay legal and re-mortgage fees each and every time you buy a share, so the larger the chunk, the better!

Once you’ve staircased your way to 100%, you’ll own the property outright and will no longer need to pay rent, turning your dreams of home ownership into reality.

Staircasing

Ideal for: Home Group shared owners who want to buy more shares in their home as and when they can afford it.

Do you qualify for staircasing?

You have purchased a home using our shared ownership scheme (see page 18).

You are able to buy more shares in your home.

You can afford the monthly mortgage repayments for your share.

To check your eligibility and discuss staircasing with one of our knowledgeable and experienced advisors, contact us today on 0191 731 1445.


Rent

Own

25%

50%

75%

100%

OwnAre there any time restrictions on when I can staircase?Not at all. You can buy more shares of 10% or more of the value of your home as and when you can afford to do so. There’s no obligation to staircase and there’s no restriction on the number of times you can staircase, either (but we’d recommend you check if there’s any stamp duty or tax implications).

Will I still have to pay rent if I can’t staircase to 100% ownership?Yes, you’ll have to pay rent on the un-purchased value of your property until you own the maximum share that’s allowed by your lease. In principle, the more you own of your home, the less rent you’ll pay.

How do I arrange to staircase?If you’re in a shared ownership and feel ready to start staircasing, please contact us and a member of our friendly sales team will be in touch as soon as possible.

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Staircasing FAQs


We’d definitely recommend shared ownership. The buying experience was really straightforward with Home Group supporting everything.

David and Caroline



Right to Acquire offers some of our customers a simple solution to affordable home ownership. If you’ve had a public sector landlord for

at least three years, then you may be able to buy your home at a discounted rate under the government’s Right to Acquire scheme.

The discount is a fixed amount set by the government and can vary between £9,000 and £16,000, depending on your location.

Right to Acquire

Ideal for: Eligible Home Group customers who want to buy their current home at a discount.

Do you qualify for Right to Acquire?

You’ve had a public sector landlord (housing associations, councils, armed services and NHS trusts and foundation trusts) for at least three years.

Your home was built or purchased with a social housing grant - or transferred from the local council - on or after 1st April 1997.

Your home is your only residence.

Your home is a self-contained property.

Can I make a joint application for Right to Acquire?If you’re eligible, you may be able to buy with someone who is on the tenancy agreement with you, your spouse or civil partner or up to three family members who have been living in your home for at least 12 months before you apply (they don’t need to share your tenancy but it must be their main home).

I don’t know how much my home is worth. How do I find out?As part of the Right to Acquire process, a qualified surveyor will value your property and calculate a purchase price for you.

Will I need to pay back the discount if I sell my home?It depends. If you sell your home less than five years after buying through Right to Acquire then you will need to repay some (or all) of your discount. But if you sell after those first five years then you won’t need to repay any of the discount.

Right to Acquire FAQs

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To check your eligibility and discuss Right to Acquire with one of our knowledgeable and experienced advisors, contact us today on 0191 731 1445.



If you rent an ex-council house with Home Group as a secure tenant or an assured tenant with a protected Right to Buy, then you may be able to buy your home at a discounted rate under the government’s Right to Buy scheme. The scheme may apply to you

if your home was owned and managed by a local council when your tenancy started and it was transferred to Home Group while you lived there. You also may be eligible if you’ve been renting your home from us since before 15th January 1989.

The discount for Right to Buy can be sizeable - up to £82,800 to be exact (or up to £110,500 in London). But of course, this will depend on the number of years you’ve been living in your current home and whether it’s a flat or a house.

Right to Buy

Ideal for: Home Group secure tenants or assured tenants with a protected Right to Buy who want to buy their current home at a discount.

Do you qualify for Right to Buy?

You’re a secure tenant or an assured tenant with a protected Right to Buy.

You’ve had a public sector landlord (council or Home Group) landlord for at least three years.

Your home is your only residence.

Your home is a self-contained property.

Can I make a joint application for Right to Buy?If you’re eligible, you may be able to buy with someone who is on the tenancy agreement with you, your spouse or civil partner or up to three family members who have been living in your home for at least 12 months before you apply (they don’t need to share your tenancy but it must be their main home).

I don’t know how much my home is worth. How can I find out?As part of the Right to Buy process, a qualified surveyor will value your property and calculate a purchase price for you.

Will I need to pay back the discount if I sell my home?It depends. If you sell your home less than five years after buying through Right to Buy then you will need to repay some (or all) of your discount. But if you sell after those first five years then you won’t need to repay any of the discount.

Right to Buy FAQs

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To check your eligibility and discuss Right to Buy with one of our knowledgeable and experienced advisors, contact us today on 0191 731 1445.



Voluntary Right to Buy is a proposed government-backed scheme to extend Right to Buy to all housing association tenants in England.

The government is currently testing the scheme through

pilots. Some Home Group tenants in the Midlands who were successful in the 2018 government ballot (the second pilot) may already be eligible to buy their home through Voluntary Right to Buy.

Successful applicants were chosen at random and will have already been contacted by the government.

Voluntary Right to Buy

Voluntary Right to Buy is a proposed government-backed scheme to extend Right to Buy to all housing association tenants in England.

I missed the window for entering the ballot. Is there anything I can do?There are no immediate plans to reopen the ballot after the 16th September 2018 - any decision by the government will depend on the level of demand. But don’t worry, we’ll contact all our existing customers if anything changes.

I entered the ballot in time but wasn’t successful. Why is that?Applicants were selected at random by the government to fill a limited number of places, so unfortunately not everyone who has entered the ballot has been able to participate.

Where can I find out more information about Voluntary Right to Buy?You can find out more information about the scheme on the government’s Voluntary Right to Buy page, which you can check out at www.righttobuy.gov.uk

Voluntary Right to Buy FAQs

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To check out the answers to some of our most asked questions about Voluntary Right to Buy, please visit: www.homegroup.org.uk/voluntaryrighttobuy

If you would like to know more, please visit: www.righttobuy.gov.uk

To check your eligibility and discuss Voluntary Right to Buy with one of our knowledgeable and experienced advisors, contact us today on 0191 731 1445.


Start by drawing up an honest monthly budget to work out what it really costs you to live and work out a plan you can stick to.

Budgeting tips

Once you’ve found the affordable housing scheme that’s right for you, it’s time to start saving!

The good news is that sticking to a budget doesn’t need to be as hard as you think! Here’s 5 top tips to help you on your way to saving success…

Bad debts can really weigh you down. Credit cards in particular can be super costly and carry sky-high interest rates. Make the effort to pay a bit more back each month to lower the amount you owe.

Whether it’s your broadband, your mobile phone or gas and electric, there are a number of ways to reduce your monthly bills with just a quick call to your provider. Don’t get sucked in by seemingly appealing introductory offers - make sure you compare all the different deals available.

If you don’t have one, you’re missing out! Most companies offer discounts when you pay bills regularly via direct debit, which can help lower your monthly outgoings and you’ll need one for your mortgage application too.

Take the time to write a list of all your small monthly expenses, and you’ll probably be blown away by how much money you can save. Reduce your food bill by creating meal plans, take a packed lunch to work, walk when you can, catch up with friends at home. Little changes like these can really add up to heaps in the long run.

Tip 1Draw up a monthly budget

Tip 2Pay off any bad debt

Tip 3Shop around

Tip 4Bank accounts

Tip 5Lifestyle changes

For more great money management hints and top tips, please visit: www.homegroup.org.uk/money



Ready to take your first step on the property ladder?

Great! Now all you need to do is to drop us a line. Our friendly team of advisors are a knowledgeable bunch and are on hand to answer any questions you might have about buying your first home with Home Group.

If you are looking to buy a new build home call 0800 073 0600 or [email protected]. For all other enquiries call 0191 731 1445 or [email protected]

GlossaryBuying your first house can be complicated enough without having to decode new home jargon. Here’s a breakdown of some of commonly-used terms and schemes to give you a leg up.


Affordable housingA broad term that covers houses that are offered for sale at a price below their market value. Affordable properties are aimed at people who can’t otherwise afford to buy one.

Government housing schemesGovernment housing schemes offer people financial help with grant funds to support home ownership. These schemes include Help to Buy, Right to Buy, Voluntary Right to Buy, Right to Acquire and shared ownership.

Discounted salesWhen councils and housing associations (like us!) build new homes for sale, some are sold to eligible first time buyers at a 25%-50% discount.

ResalesResales are homes that the owner originally bought through shared ownership and now wishes to sell on. It’s still pretty much the same as buying a new build through shared ownership, except you have to buy the share that the seller currently owns. However, it’s still entirely possible to buy further shares whilst acquiring a resale.

OPSOAlso known as ‘Older People’s shared ownership.’ The OPSO scheme is designed and managed specifically for people aged 55 and over to help them buy any home that’s for sale through shared ownership.

FreeholderThe complete ownership of a home and the land on which it stands. Freeholders are fully responsible for the maintenance of the building and the grounds.

LeaseThe lease is the legal contract between the home owner and Home Group which sets out the terms, conditions and payment arrangements relating to land, property and services.

LeaseholdTenants who own a leasehold on a property have the right to live in the property for a set period of time. Leaseholders do not own the land the property is built on.

Get in touchHome Group – Head Office2 Gosforth Park Way, Gosforth Business Park, Newcastle-upon-Tyne NE12 8ET

Let’s get social

Looking to buy a new build home?T: 0800 073 0600 E: [email protected]: www.homegroup.org.uk

For all other enquiriesT: 0191 731 1445 E: [email protected]: www.homegroup.org.uk

first time home buyer guide€¦ · first time home buyer guide 03 with the average house deposit...

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