First-time buyer benefits – what schemes are available?
Any first-time buyer trying to save up for a deposit to purchase their first home may feel daunted by how expensive the housing market is.
There is no doubt that it is much more difficult to get your foot onto the property ladder than ever before. In 2023, House Buyer Bureau reported that house prices today are 8.8 times people’s average earnings, which – it says – has more than doubled since the 1970s.
And in its Home Affordability report, Skipton Building Society found that of the top 25% of earners, just 44% of first-time buyer households could afford to buy in their local area.
So what can first-time buyers do to maximize their savings and earnings, to buy a property to call their own?
Help is at hand!
Successive governments have recognised the need to provide help for first-time buyers in the form of different schemes and savings policies to give them the best chance of owning their own homes.
Introduced by the UK government in 2017, the Lifetime ISA allows people to save £4,000 each year towards their first home, with a tax-free government bonus of 25% capped at £1,000 per year. The Lifetime ISA is now offered by a range of different providers, banks and building societies.
Alongside help to save for your deposit, schemes also exist to help first-time buyers purchase their first home too. Perhaps the most high-profile example of this was Help to Buy, where the government would lend a proportion of the cost of a new-build home as an ‘equity loan’, which was interest-free for five years. This made it easier for first-time buyers to buy with a smaller deposit.
After helping more than 300,000 first-time buyers get onto the property ladder, Help to Buy closed in England and Scotland. However, a version of the scheme is still available in Wales.
What options are available now?
In the absence of Help to Buy, first-time buyers can access the Shared Ownership scheme. This is a government-backed scheme where people buy a home by purchasing a share of the property and then pay rent on the rest. As your financial situation changes, you then have the opportunity to buy a larger share of the property through something called “staircasing”, which reduces the amount of rent paid.Other alternatives include the First Homes scheme. This allows first-time buyers who are purchasing a new build or a home previously bought through the scheme to buy property at 30% to 50% less than its market value, as long as they earn under a certain threshold and meet the rest of the criteria. First-time buyers can also investigate the Deposit Unlock scheme, which is a collaboration between housebuilders and select lenders where first-time buyers can purchase a new build home with a 5% deposit.
Furthermore, there’s a government-backed mortgage guarantee scheme which also allows buyers to use a deposit of just 5%. It provides lenders with the option to buy a guarantee – almost like an insurance policy – to offer 95% loan-to-value (LTV) mortgages to creditworthy customers.*
Seeking advice can make a difference
While it can be challenging for first-time buyers to make that step onto the property ladder, options and support are available. If you’re looking buy your first home and you’re not quite sure which scheme is best or if you’re even eligible, a good place to start is by speaking with a mortgage adviser.
As well as helping you find the right mortgage deal for your individual circumstances, as expert mortgage advisers, we can suggest other ways to make your money go further when buying your first home.
To book your appointment with us, please call 020 7317 7311 or email info@chapelgateprivatefinance.com.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
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