Key Worker Mortgages

Key worker mortgages were introduced in 2004 as part of the UK government's Key Worker Living Programme. Unlike self build mortgage options, the aim of this programme was to help out key public sector workers across the UK. The introduction of key worker mortgages was a way to ensure that a public sector worker on a low income was able to buy a flat or property. There are three types of key worker mortgages; these are a homebuy loan, a higher homebuy loan and a shared ownership loan.

The Different Types

Each of these loans adheres to a different kind of public sector worker with different incomes and priorities for a prospective property. Homebuy mortgages are aimed at those who are looking to borrow £50,000 to toward a house or a flat. Higher homebuy mortgages are the same concept but with a higher cash limit of £100,000. Only senior school teachers in the city of London are able to access these higher homebuy mortgages. Lastly a shared ownership mortgage is for those looking to get part of a shared mortgage on a house or a flat.

Different From A Normal Mortgage

It is important to note that key worker mortgages are not like traditional mortgages. They are there to pay for a public sector workers mortgage deposit rather than the majority of the property like most mortgages. If you want to get a key worker mortgage you need to go through the same process as you would do to get a normal mortgage. Find a property that you like and then approach a bank or building society and ask for a mortgage from them to get the property. Once your application has been processed your mortgage provider will give you the terms and conditions of your mortgage which will include the deposit requirement that they want from you.

This is likely to be around 25% of the property's value. Once you have details of your mortgage deposit you can start looking at key worker mortgages such as the homebuy loan to pay for it. You can find out what lenders offer key worker mortgages by contacting your local housing association and asking them what lenders in the area will offer this type of mortgage. The lenders offering these mortgages will not be your traditional mortgage providers such as banks and building societies. This is because a key worker mortgage is unlikely to have an interest rate attached to it which means that there is no profit for the lender.

Other than the criteria of needing to be a senior teacher living in London when looking to get a higher homebuy mortgage, these key worker mortgages are available to most public sector workers such as NHS workers, teachers, police officers, fire fighters, social workers and those working in the penal system such as prison officers and probation officers. If you are thinking of applying to one of these key worker mortgages you need to be working in certain parts of the country to qualify. These areas are London, East Anglia and South East England. The reason for this is due to the high costs of living in these areas which means that key low income public workers in these areas cannot afford to buy a flat or a house.

Applying To The Mortgage

Once you have found out which organisations could offer you a key worker mortgage you can approach them and make your application. Despite not charging an interest rate, your lender is still going to subject you to the same checks you would get when you applied for a normal mortgage. How risky you are to them is going to determine whether or not they grant you a loan. This is when your credit rating and income will be assessed. If you have a high credit rating and are likely to pay back the lender and meet all other requirements you should be granted the mortgage without too much trouble.

If you have a bad credit rating on the other hand it may be more difficult. As there is no interest attached, it means that the lenders are taking a huge financial risk by offering you a loan. For that reason they are going to be more cautious of bad credit ratings than the banks and building societies who offer a standard mortgage.

If you get granted the mortgage you can use the money to pay for your deposit and then get the property that you have wanted. This is how the key worker mortgages scheme helps those low paid public sector workers who are unable to save up the money to pay for a mortgage deposit. This means that these workers are going to live a better life and be able to work in the public sector for longer which is the government's aim with this scheme.