Key Worker Mortgage: Costs & Availability
Key Worker Mortgages for up to 25 percent of a property’s purchase price may be available for key workers, in designated areas. As with other types of mortgage, the amount available to borrow will depend on your ability to repay the loan. Therefore, your level of income and financial outgoings will influence how much the lender is prepared to loan to you as a Key Worker Mortgage.
Charges and Arranging a Key Worker Mortgage
In order to obtain a Key Worker Homebuy Mortgage, the normal method is first to find a property and then to arrange a conventional mortgage from a financial institution of your choice, for 75 percent of the cost. Once this finance has been agreed, you are then in a position to apply for a Homebuy mortgage to cover the remaining 25 percent of the price of the property.
Mortgage Calculation: Example
For a £180,000 property, you would obtain a conventional mortgage for £135,000 and a Homebuy mortgage (usually interest free) for £45,000. If you subsequently sell the property for £200,000, you would then be required to repay 25 percent of the value of the property at the time of sale (i.e. £50,000) to pay off the Homebuy mortgage. In this way, you would have gained at least £15,000 (i.e. £200,000 less £50,000, less £135,000) in equity to put towards the purchase of your next home.
Shared Ownership Loans
Key Worker shared ownership loans operate in a broadly similar manner, but instead of buying a property outright, you would buy part of property (minimum 25 percent, maximum 75 percent), usually from a housing association and then rent the rest of the property.
For example, if you bought 50 percent of a £100,000 property for £50,000 and later the property was sold for £120,000, you would have to pay back 50 percent of the value (£60,000) to pay off the loan, leaving you with £10,000 (i.e. £120,000 less £60,000, less £50,000) in equity.
Typical Key Worker Mortgage Lenders
The number of available Key Worker Mortgages is limited. To find out what is available, you first need to contact the zone agent (a designated local housing association) for the area in which you work, in order to ascertain whether the type of job that you do qualifies you for a Key Worker mortgage in that area and to establish whether funds are available.
The Key Worker mortgage zones are administered geographically as follows:
Bedfordshire and Cambridgeshire
Norfolk and Suffolk
Rest of the South East (Berkshire, Buckinghamshire, Hampshire, Kent, Oxfordshire, Surrey and Sussex).