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Is there currently a First Time Buyer Scheme available?

Hey there, First Time Buyers! Now that the popular ‘Help to buy’ scheme is over, you are probably wondering if there is a First Time Buyer scheme available. Fear not, the government is still providing multiple options for buyers, who have not owned their own property before. Hopefully one of these options could help you onto the property ladder.

Depending on your circumstance, these are the options available to FTB:

  • GOV: First Time Buyer Scheme
  • Mortgage Guarantee Scheme
  • Shared ownership 

1. GOV: First Time Buyer Scheme

What is on offer?

This scheme is offered exclusively to FTB who are buying a new build property, who live in England and are 18 years of age or over. The scheme allows purchasers a discount of at least 30% when buying their first new build home. Although not all new build properties are part of the scheme, you can check with new build developments if they are offering the scheme on their affordable housing. An independent surveyor will be used to value each home that is sold to ensure the discount given is based on the actual market value.

How can I qualify?

The scheme is designed for homes that: 

  • Cost no more than £420,000 in London, or £250,000 anywhere else in England (after the discount has been applied).

The scheme is for buyers who must be:

  • 18 or older
  • a first-time buyer
  • able to get a mortgage for at least 50% of the price of the home
  • buying the home as part of a household where total income is no more than £80,000 (or £90,000 if you live in London)

There are specific people (key workers or local residents), whom the council can prioritise the discount to if they wish. The best thing to do is enquire directly with new build developers to see if the scheme is available in your desired area.

Full details available at:

https://www.gov.uk/first-homes-scheme

https://clementsfinancial.co.uk/mortgage-advice/how-to-get-a-mortgage/

What happens when I want to sell the property?

When you decide to sell your property, you may only sell it to another FTB who wishes to buy a property using the original percentage discount you received on the scheme; based on the new value of the property. 

So if you bought a £250,000 house with a 30% discount (£75,000), and by the time you sell your home it is £300,000. You will also have to sell your home with a 30% discount of its current value, 30% of £300,000 (£90,000).

2. Mortgage Guarantee Scheme

What is on offer?

Originally dated to finish in 2022, the scheme has currently been extended to December 2023. This scheme enables you to buy a property with a 5% deposit, valuing up to £600,000. The government will ‘guarantee’ eligible buyers on their 95% mortgages, meaning that the government will partially compensate the lender if the buyer fails to pay their mortgage. As well as being a first time buyer scheme, this is also available for some home movers.

Why is this different to other mortgages?

The mortgage you will apply for is of a ‘91-95%’ loan, which will be referred to as a ‘Loan to Value’ (LTV) mortgage. They are useful in helping clients get a mortgage who are struggling to save for a deposit. However, this kind of mortgage could result in your loan being more expensive than your property value causing you to fall into negative equity. Rates on the type of mortgage are also usually higher than others who are not using the scheme.

Full details available at:

https://www.gov.uk/government/news/government-extends-mortgage-guarantee-scheme

3. Shared Ownership Homes

What is on offer?What is on offer?

Shared ownership allows you to purchase a property quickly and with little deposit. Essentially, it’s a part buy part rent initiative. When using this scheme you buy a share of your property that is between 10% and 75% of the home’s full market value. Meaning that the property is only partially owned by you. You also have to pay rent to the landlord for the share they own. There could be other fees such as ground rent and maintenance fees that have to be paid as well.

How can I qualify?

The scheme is designed for homes that:

  • a new-build home
  • an existing home through a shared ownership resale scheme
  • a home that meets your specific needs, if you have a long-term disability – for example, a ground floor flat

Shared ownership homes are offered by housing associations, local councils, and other organisations. They are called ‘providers’ or the landlord. All shared ownership homes (houses and flats) are leasehold properties.

Is there an opportunity to buy more shares of my property in the future?

Buyers can take out a mortgage to buy their share of the property, usually needing 5-10% of the share that they are intending to purchase. The more shares you buy, the greater portion of the property you will own, and you will therefore pay less money to the landlord for their share. You can buy more of your property at a future date. 

Full details available at:

https://www.gov.uk/shared-ownership-scheme

Where do i start?

Start by speaking to a mortgage adviser to find the best option is for your situation. You can also download our FREE guide – The Home Buyer Handbook – now. Click the link below to get yours:

https://clementsfinancial.co.uk/free-home-buyers-guide/