Key Worker housing initiatives represent a great opportunity for eligible professionals to secure housing within their local market at a much lower cost. Historically, these initiatives have been predominantly affiliated with governmental housing programs and are typically administered by housing associations.
While some social landlords, local councils, and private developers conduct their own programs independently, the specifics can differ based on your locality, region, and individual circumstances.
Identifying suitable housing schemes in 2023 marks the initial challenge. It is essential to understand which lenders are more inclined to approve your mortgage application adds complexity. Hence, many key workers seek assistance from our mortgage broker to facilitate their entry into property ownership.
This concise guide outlines potential options available to you. Should urgency arise, feel free to reach out to our team directly via WhatsApp or by contacting us without delay.
Contents
Housing Eligibility Criteria for Key Workers
Each organization follows a specific criteria to determine the eligibility for key worker housing. However, there are common general conditions applicable across key worker schemes, which include:
- Household income should not be more than £60,000 annually.
- Employees should have minimum of 5 years left in service before retirement.
- Applicants are required to display their inability to purchase a suitable home within a reasonable commuting distance from their workplace without any help of financial aid.
- UK or EU/EEA citizenship or indefinite leave to remain in the UK is a must for applicants.
- Proof of savings or getting access to at least 5% or more of the property purchase cost is required.
- Applicants should have a permanent employment.
- Certain schemes may suggest that applicants must also be a first-time buyers, and in some cases, they may need to be local first-time buyers.
Available Key Worker Housing Schemes 2022
Right To Buy
Focusing on the main objective of substituting each every sold house with an affordable rental unit. This strategy ensures that a continuous availability of reasonably priced housing caters to individuals awaiting property purchases.
Help To Buy Equity Loan
The equity loan program, is designed keeping in mind first-time buyers, assists in purchasing properties with a minimal 5% deposit by providing a Government loan to cover the remaining portion that would have constituted the deposit. This Government loan remains interest- and payment-free for a span of 5 years and is exclusively applicable to new homes.
In the immediate term, Help to Buy proves to be a convenient borrowing option, particularly beneficial for key workers who face challenges in affording a substantial deposit to secure a mortgage.
A Shared Ownership is different from equity loan scheme, where in a program is designed to assist individuals who can afford a mortgage covering 100% of a property’s value. Shared Ownership helps the buyers to acquire a share of their home, ranging from 25% to 75% of the property’s total value, while paying rent for the remaining share.
This scheme allows the chance to increase ownership by purchasing a large share of the home later on, a process commonly known as “staircasing.”
Shared Ownership scheme can be applied to both the new and pre-owned properties, typically offered with a leasehold arrangement that lasts for 99 years.
First Homes Scheme
This key worker initiative was launched in June 2021 and notably differs from both the equity loan and shared ownership schemes that are facilitated by housing associations.
The First Homes scheme is made with a vision to support local first-time buyers, including many key workers like NHS staff, teachers, and veterans. It offers homes at a minimum discount of 30% in comparison to the market value of the overall house price.
This discount percentage is then carried forward upon the property’s future sale to subsequent first-time buyers, making sure that the homes are consistently sold below market value. This approach helps the local communities, key workers, and families for years to come.
95% Mortgages
The mortgage guarantee initiative lets the first-time buyers to puchase a home with merely a 5% deposit. This program helps to boost the availability of mortgages which requires a 5% deposit for financially responsible households by helping the lenders in providing these products, backed by a government guarantee.
While not all these schemes are designed keeping in mind the key worker mortgage schemes, key workers can gain advantage from them. In some cases, these options are advantageous than solely exploring the open market or paying rent.
Getting a key worker housing scheme with bad credit
In reality, there is no such thing as a ‘bad credit’ score. Credit scoring methods vary among the credit file reference agencies in the UK, namely Experian, Equifax, and TransUnion.
Instances of poor credit issues can leave an impact on your credit assessment. Unfortunately, even a small blemish on your credit history, such as delayed payment for a utility bill or a missed credit card installment, can give an impression to vendors about your inadequate financial management, thereby leaving you with a higher risk.
While it’s not an insurmountable obstacle, these factors do contribute to getting a key worker mortgage. We strongly advise seeking mortgage advice before applying for a new home scheme.
Check your credit score today!
Each credit reference agency employs slightly varied calculations to understand your credit rating, making use of distinct scoring systems. Consequently, to get a good credit score it i also dependent on specific agency that your lender utilizes among the four major agencies.
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