Low Cost Housing
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What is Low Cost Housing?
Low Cost Housing, also known as Affordable Housing or Section 106 Housing, helps people buy homes they might not otherwise afford.
Through this government initiative, buyers can purchase homes at prices up to 40% less than the market value.
Local councils manage the scheme and set specific eligibility rules.
How does Low Cost Housing work?
Homes are sold at a discounted price. For example, a house valued at £100,000 with a 25% discount will cost qualifying buyers £75,000.
Even with the discount, you own the entire property.
Unlike the First Homes scheme, this is available to more than just first time buyers.
Who qualifies for Low Cost Housing?
To qualify for these schemes, you typically need to meet strict criteria:
- Need for Assistance: You must demonstrate the need for help to purchase a home. This usually means you can afford the discounted price but not the full market value. Your deposit, mortgage affordability, and household income will be assessed.
- Local Connection: You should have ties to the area, such as living, working, or having family there.
- Property Ownership: You must not own any other property. The scheme isn’t only for first time buyers; it can also apply to those selling their current home due to changed circumstances.
Local councils may have different criteria, so always check the requirements in your area. Council websites often provide specific details, like the example from Chorley in Lancashire.
Is Affordable Housing the same as council housing?
No, Affordable Homes are privately owned, while council housing is owned by the council. However, councils ensure Affordable Housing is sold to local people who genuinely need it.
How does buying Low Cost Housing work?
Estate agents sell homes in this scheme just like any other homes. The advertisement should mention that it’s part of a low-cost affordable housing scheme.
If you find a home you like, apply to your local council to check if you qualify. Once they approve you, you can apply for a mortgage.
Lenders need to ensure they can sell the home at its full price to anyone if they repossess it. If this rule isn’t in the legal paperwork for the property, you won’t be able to get a mortgage.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Unsure if you can get a mortgage?
Contact us now for a no-obligation chat.
What deposit is needed?
A deposit of at least 5% is usually needed. More might be required depending on your circumstances.
Can I qualify for a Low Cost Housing mortgage with bad credit?
Potentially, yes. Lenders are available who can consider some elements of adverse credit.
How much can I borrow?
That depends entirely on your personal circumstances.
Lenders undertake a thorough assessment of your income and expenditure in order to reach a figure. They factor in things like student loans, childcare, and maintenance payments as well as credit cards and personal loans.
Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible.
Can I sell the house in the future?
When you want to sell your home, the buyer must qualify for the Affordable Housing scheme in your area. If house prices go up, you’ll make more money, but you still have to sell the home with the same discount you got when you bought it. You usually need to tell the council you want to sell so they can find new people who qualify.
In some places, you can talk with the council about buying their share. This lets you sell the home at its full price later on.
Pros and cons of Low Cost Housing
Pros
- You can get a house for less money
- Strict criteria means there is less competition
- Gets you on the ladder if you can’t afford a property at full market value
Cons
- Strict criteria means you may not qualify
- Limited availability of houses
- You’ll have to sell at a discounted price in the future
- A limited number of banks and building societies will consider lending on these types of property
How can The Mortgage Store Chorley help with Low Cost Housing?
Ready to buy an affordable home? Let The Mortgage Store Chorley help you out! We know all about Low Cost Housing and can make it easy for you. We’ll guide you through the process and assist with your mortgage application.
Contact us today to get started.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
