Schemes are set up to work in two different ways:
- Some households will get a shared equity loan.
- Others will be offered help from a ‘mortgage to rent’ scheme, whereby a local housing association buys their property and rents it back to them.
Shared equity loan
To be eligible for a shared equity loan, you will need to have some equity in your property. If you qualify, you will be given an equity loan from a housing association which should enable you to keep up with your mortgage payments. The loan is repayable to the housing association but is interest free.
Mortgage to rent
If you cannot afford to continue owning a share of the property, the housing association may decide to buy the property at close to market value, and rent it back to you.
You would no longer own your own home and in most cases you would be given an assured or an assured shorthold tenancy.