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If you live in the United Kingdom and want to buy your first home, you can avail of financial assistance from different home ownership plans. The First Buy Equity Loan Scheme is a mortgage assistance programme that provides a respite through supportive aid.
The plan allows you to procure a mortgage from a lender. You have to put in a deposit as well, towards the cost of the home. The deposit and the mortgage make up about 80% of the home price. The government and the house builder take care of the remaining sum through an equity loan. You may find the Home Buy agent in the area you want to reside, if the scheme meets your approval.
The registration of the property will be in your name. This allows you to dispose of the home whenever you want to. You must give a share of the sum received from the sale to the homebuilder and the government. If you decide to keep the property, you may repay the equity loan to the builder and the government after 25 years.
A borrower can avail of this scheme, if he is buying a home for the first time. His household cannot earn more than sixty thousand pounds a year. Besides, the borrower must establish with the authorities that he cannot afford to buy a home in his area with a regular mortgage.
You will have to pay equity loan fees apart from paying off the equity loan after 25 years or at the time of selling the property. However, you do not need to pay these fees for the first five years. The scheme requires you to pay 1.75% of the equity loan during the sixth year. The Retail Price Index works out the fees for the subsequent years. It is crucial to note that these fees are in addition to the mortgage repayment charges every month.
It is a sensible idea to pay off the equity loan as soon as you can afford it. You may dispose of your home at a better price by doing so. If you cannot afford to pay the entire amount of the loan early, you can recompense a part of the loan. This will reduce your yearly equity loan fees.