6 Mortgage Schemes for First-Time Buyers

With the housing market and property prices skyrocketing, it is becoming increasingly difficult for those just starting to get a foot on the ladder.

First-Time Buyers are an important cog in the property market. One way to help these people is by introducing mortgage schemes that provide them with assistance to ensure that housing is still accessible. Interest rates, fees, and repayment options vary from scheme to scheme, so it's worth looking around for one that suits your needs best and find out more about the eligibility criteria and conditions. There are various schemes available - Read on for a brief overview of these schemes.

Help to Buy Equity Loan – available until 2023

The Help to Buy Equity Loan, a government scheme available until 2023, is designed for first-time buyers of new-build homes. If you have a 5% deposit, you can apply to borrow up to 20% (40% in London) of the purchase price in the form of an interest-free equity loan for the first five years.

This scheme is a great way for first-time buyers to get on the ladder with a well-priced property.

Help to Buy – Mortgage Guarantee Scheme

In the 2021 Budget, the Government announced a new scheme called Help to Buy - Mortgage Guarantee Scheme. With this new scheme, homeowners will borrow up to 95% for a mortgage from a lender. The new scheme aims to make property more accessible to those with low deposits, following these schemes being withdrawn during the start of the Covid-19 pandemic.

With schemes like Help to Buy, the Government makes it possible for homebuyers to get into their own property with a 5% deposit.

Forces Help to Buy

Servicemen and servicewomen can now benefit from a scheme called Forces Help to Buy. This scheme offers loans of up to 50% annual salaries - maximum £25,000 - to help them gain ownership of their first home. This loan can be used towards a deposit and other costs such as solicitors and estate agent fees.

The Joint Personnel Administration system or military personnel agency can help servicemen and servicewomen fill out an application for this loan.

Shared Ownership

Shared Ownership offers an opportunity for people looking to get on the property ladder but can't afford it as outright owners, to get involved and start building up equity. With Shared Ownership, you can buy a % share of the home from a landlord, usually the local council or a housing association, and then you would pay rent on the remaining share of the property.

You would need a mortgage to pay for your share- this can be between 25% and 75% of the property's full value. You would then pay a reduced rent on the share of the property you don't own.

You have the option to buy a bigger % share of the property and 'staircase' up to 100% of its value at any time.

Shared ownership is a great answer to help keep property prices affordable.

First Homes Scheme

The First Homes Scheme, a government scheme launched in June 2021, is an opportunity for first-time buyers to purchase a home with a discount of at least 30% (and in some cases up to 50%) compared to the market value of equivalent properties.

Purchasers must have a household income of less than £80,000 (or £90,000 in London). The First Homes Scheme helps people, particularly key workers, to get on the housing ladder in their local area and buy homes close to where they work. Local authorities are being encouraged by the Government to prioritise applications from local key workers for the First Homes scheme.

To use the scheme, research which builders and developments locally to you are offering First Homes. If the homes are available in your area, you will need to make direct contact with the builder to check whether you meet the local and national criteria of the scheme. If you are eligible, the builder will help you make your application to the local authority.

Lifetime ISA

To be eligible for a Lifetime ISA, you must be 18 - 39 years old.

With a Lifetime ISA you can save up to £4,000 during each tax year, and you'll get a bonus from the Government - 25% of the total amount you pay into your Lifetime ISA each year - not including investment interest or investment growth.

For example: If you pay in £4,000, you will receive a tax-free bonus of £1,000 that year.

If you transfer money into a Lifetime ISA from another ISA, this also qualifies for the same bonus.

Other Schemes

These are all the official schemes available – however, there are other options outside of these – such as:

Gifted deposit from family, Joint Borrower Sole Proprietor - a re-invention of guarantor schemes whereby two people can be on the mortgage but only one owns the property.

Right to Buy of council rented properties.

10 Frequently Asked Questions about getting on the property ladder

1. How can first time buyers get on the property ladder?

First time buyers who are struggling to purchase a property need to have strong credit scores and sufficient deposit money.

2. What is the fastest way to get on the property ladder?

With property sales moving quickly it is imperative you are ready BEFORE you find your dream home. Book a free, initial, no obligation appointment with us so that we can get you Mortgage Ready. We'll have a look at your circumstances and check over your documents so that when the times comes you look as attractive as possible to a lender, and are ready to go as soon as the you find a property.

3. Why can't first time buyers get on the property ladder?

There are a number of reasons why first-time buyers can struggle with getting on the property ladder, such as low deposit amounts, or being unable to borrow the amount needed to secure a property, particularly if they are struggling financially. But there are various schemes designed to help them get into their home more quickly.

4. What is the first step towards getting on the property ladder?

For many people, the first step towards getting on the property ladder is saving for a deposit. There are various schemes available to help you save, such as lifetime ISA.

5. Who can get help from government to buy a house?

The government offers a number of schemes designed to make it easier for first-time buyers to get into their home. Please get in touch to explores your options.

6. How much do you need to get on property ladder?

Getting on the property ladder involves saving enough money for a deposit and also to also cover other expenses such as stamp duty and legal fees.

7. When is the best time to buy a house?

That depends on your situation. Different people have different priorities, so you need to think about why you want to own a home and then make an informed decision.

8. What is the first thing to do when buying a house?

The first step for anyone considering buying a house is getting advice from a professional and making sure it's the right time to buy.

9. How can you be financially ready to buy a house?

There are some steps you can take before considering buying a house, which will help make your finances in tip-top shape. It is imperative you are ready BEFORE you find your dream home. If you want to know if you are Mortgage Ready, book an initial free appointment with us. We'll have a look at your circumstances and check over your documents so that when the times comes you look as attractive as possible to a lender, and are ready to go as soon as the you find a property. Get in touch for more information.

10. Can I still get help-to-buy if I'm self employed?

Yes! Many people who are self employed find that they can use the help-to-buy scheme. Your income will be assessed differently by the lenders than if you are employed so get in touch to find out more.

Ready to take that first step?

There are a number of schemes in place to help first-time buyers get into their homes. This is just a quick summary, but please get in touch for more information on any specific scheme.

If this is something you would like to learn more about or have a look at the variety of options you can apply for, do not hesitate to contact us.

Call us on 01323 436680 or email rachael@willowtree-fs.co.uk

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