New Build Shared Equity
Information for people wishing to buy a new build home with a shared equity loan
Moat is the government’s HomeBuy Agent for Essex, Kent and Sussex. We are delighted to offer the New Build Shared Equity (NBSE) scheme to first time buyers wishing to purchase a new build property in Essex, Kent and Sussex.
What is New Build Shared Equity?
This is a new (announced in May 2008) government initiative:
MyChoiceHomeBuy offers a shared equity loan of between 15% to 50% of the purchase price. This can be used in conjunction with a conventional mortgage from a range of qualifying lenders. A low monthly interest charge of 1.75% is payable on the equity loan. This rises in line with inflation each year.
Who is eligible for New Build Shared Equity?
Like all HomeBuy products, New Build Shared Equity is designed to help people who cannot afford to buy a property that suits their household needs without assistance.
First time buyers earning between £20,000 and £60,000 per annum (single or joint) could be eligible for NBSE, provided they cannot afford to buy a property to suit their basic household needs on the open market. The scheme is demand-led, based on affordability, but social tenants and public sector key workers who apply are given priority.
We can also help you if you have previously owned a property but are now unable to buy without assistance, for example if you are coming through a relationship breakdown, or if your family is over-crowded in your existing home.
Savings of £3,500 are required to cover the initial costs of purchase. There is additional criteria, for example, levels of debts/loans, etc.
Which developers are offering New Build Shared Equity?
This is a client based product and is not linked to individual new build developments. We recommend you look through the adverts in local newspapers in the area where you need to live, or search through property websites such as www.rightmove.co.uk.
Can I buy any type of property?
Under NBSE, most new build apartments and houses will be acceptable, with a limit on the purchase price of £250,000 net. We will apply some flexibility on this maximum price subject to our written confirmation and at our sole discretion.
You can buy a property with one bedroom in addition to your basic household needs. For example, a single person, or a couple with no children can purchase a one or two bedroom property. A couple with one child can purchase a two or three bedroom property.
How do I apply for New Build Shared Equity?
We recommend you visit our website at www.homebuy.co.uk. An online application form facilitates a swift process. You will receive a response from us within eight working days from the day your application is submitted.
Please include the following on your application form:
- the name of the new build development where you wish to purchase a new build property and the name of the developer
- the words “New Build Shared Equity”
Please do not pay the developer any reservation fee (unless this is refundable) until you hear back from us, in writing, with clear instructions at the point when you can pay the reservation fee and commence the sale process. Our letter will confirm the maximum purchase price and the amount of the shared equity loan that apply to you.
Equity loan providers
For MyChoiceHomeBuy, Moat is the equity loan provider for people who live in Essex, Kent and Sussex, and for key workers who work in any of these three counties.
Independent mortgage advice
To proceed through Moat’s New Build Shared Equity (MyChoiceHomeBuy), please contact one of the mortgage advisors on Moat’s panel to receive mortgage advice and to arrange your mortgage, before you reserve a property. This is a fixed condition for Moat’s New Build Shared Equity scheme. A list of Moat’s panel independent mortgage advisors is provided at the end of this document.
If your mortgage assessment is satisfactory you will be given a formal offer letter from Moat which clearly outlines a maximum purchase price and the time scale allowed for you to secure/reserve the new build property of your choice. This offer can be withdrawn at any time.
Can I buy off-plan?
Yes, but the price must be fixed and exchange of contracts must be completed within six months of you reserving a home. Moat cannot be held responsible for any costs incurred resulting from delays in the completion and availability of new properties. Please make sure you ask the developer to keep you aware of any potential delays, and subsequent costs, at all times.
About property valuations - important
If you wish to proceed with a shared equity loan, Moat expects the property purchase price agreed between you and the developer to be net of any new build premium and net of all incentives.
We ask you to check the mortgage valuation and reserve the right to request a statement of net valuation.
Moat will only approve mortgage offers that match the net market value of the property. The mortgage offer must include the % share that is being purchased.
In all cases, the net purchase price is the amount that will be included on all paperwork and legal documents.
Moat will carefully assess purchasers’ eligibility and housing need. To avoid this process being longer than necessary and impacting on developers’ timescales between reservation and exchange of contracts, please make sure that you respond speedily to our requests for information.
When I become a home owner, will I be given a lease?
With New Build Shared Equity there are no lease arrangements, unless you buy a flat and a lease applies for the communal areas and services.
You will be the owner of the property that you purchase. Your mortgage provider will hold the first legal charge on the property. Subsequent legal charges are held by the equity loan providers. No other additional legal charges are allowed under the scheme.
Other HomeBuy products?
This information relates to New Build Shared Equity, a new build initiative for first time buyers associated with Open Market HomeBuy. Other HomeBuy products such as New Build HomeBuy (shared ownership) and the First Time Buyers’ Initiative operate differently.
The Moat process – in brief
- You view a new build property and wish to reserve.
- You notify the developer and apply to www.homebuy.co.uk where you register on the website and then complete an application form.
- You will receive written confirmation from Moat (within eight working days) that you have met Moat’s basic eligibility criteria and have been accepted onto Moat’s applicant database. Note, this is not approval to proceed with a specific property.
- We will ask you to contact a Moat panel independent mortgage advisor for a financial assessment. The advisor will forward this assessment to Moat.
- Moat confirms your eligibility and affordability and confirms that you can go ahead and formally reserve a property with the developer. Moat also confirms the amount (%) of equity that is affordable and the maximum purchase price. This is the point where approval to proceed is given from Moat to you, the purchaser.
- Developer confirms time scales for reservation to exchange to you and to Moat.
Please read Moat’s brochure – Buy the home of your choice with MyChoiceHomeBuy. This provides more detailed information. If you have any further questions please email marketing@moat.co.uk or call us on 07002 662846.
Moat's panel of independent mortgage advisors:
SPF Sherwins
The Old Granary, Squerryes, Goodley Stock Road, Westerham, Kent, TN16 1SL (offices also in London, Brighton, Gillingham and Essex)
Tel: 0800 652 2365
Email: info@spfsherwins.co.uk
Website: http://www.sherwins.co.uk/
FSA number: 189213
SRC Financial Services Limited
365 Rayleigh Road, Eastwood, Leigh on Sea, Essex, SS9 5PS
Tel: 0800 954 0443 Fax: 0845 330 0188
Email: info@srcfinancial.com
Website: http://www.srcfinancial.com
FSA number: 430562
Best Advice Financial Planning Ltd
Pegler Way, Crawley, Sussex, RH11 7AF
Tel: 0800 018 2378
Email: enquiries@clearadvice.co.uk
Website: www.clearadvice.co.uk
FSA number: 413123
Your home is at risk if you do not keep up rent and mortgage repayments or payments on other loans secured on it.
Please note the value of properties can go down as well as up.