Help to buy schemes for first time buyers

If you’re dreaming of owning your own property the good news is it may be easier than you think. That’s because there are a range of help to buy schemes available designed to help you get your first foot on the property ladder – and to help you build your deposit too.

Read on to find out everything you need to know.

There are several first time buyer schemes that could help you purchase your first home.

These are:

You can buy a new build property through the Help to Buy Equity Loan scheme with just a 5% deposit. With the scheme, the government will lend you up to 20% of the property’s value; this rises to up to 40% if the property is located in London. This is the ‘equity loan’ and it is interest-free for the first five years

And you’ll take out a specialist mortgage product on the remaining amount. Only first time buyers can use the scheme and regional price caps apply on the value of property you can buy through it, from a maximum of £186,100 in the North East to a maximum of £600,000 in London*.

However, it’s important to note the scheme is only due to run until next March. So if you’re hoping to use it, don’t delay for too long or you could miss out.

(*Whenever I’ve written about the Help to Buy equity loan scheme for Mortgage Advice Bureau it has always had this on it so I’m adding here just in case but I realise Mallard Mortgages may not offer mortgages in Wales and Scotland? *There are different Help to Buy equity loan schemes for England, Greater London, Wales and Scotland. They all vary; this information relates to England and Greater London only.)

When you buy a home through shared ownership, you buy a share of a property and pay rent on the rest. You’ll usually buy a share of between 25% and 75%, although it’s possible to buy a 10% share of some homes.

Shared ownership can be popular with those who have a more limited budget. This is because by its nature you’ll need to save up a smaller deposit and you’ll require a smaller mortgage too. Once you’ve moved in you can buy a larger share of your property. This process is known as staircasing.

The Deposit Unlock scheme was launched last year in collaboration with lenders and the house-building industry. This scheme is designed to help first time buyers and homemovers buy a new build home from house builders participating in the scheme with just a 5% deposit. And you can use this scheme to purchase properties worth up to £750,000**.

(** Siobhan: Only two mortgage lenders lend on this scheme so far: Nationwide will lend on homes up to £750k while the other lender Newcastle BS will lend on homes worth up to £600,000. To avoid mentioning lenders I thought the ‘up to £750,000 would cover it?)

This is another first time buyer scheme. It’s designed to help local first time buyers and key workers onto the property ladder by offering homes at a discount of at least 30% on the market price.

And buyers using it will need a minimum deposit of 5% of the discounted purchase price. When the property is sold, the same percentage discount will be passed on.

This means properties sold through the scheme will always be sold below market value. https://www.ownyourhome.gov.uk/scheme/first- homes/

And as a first time buyer, you may be able to get a mortgage on a home worth up to £600,000 with just a 5% deposit thanks to the government-backed mortgage guarantee scheme.

It was introduced last year to encourage lenders to offer 95% LTV mortgages which had largely disappeared during the pandemic.

The scheme is open to first time buyers and home movers and you can purchase new builds and older properties too. However bear in mind this scheme is only due to run until 31 December 2022.

When you’re saving for your house deposit you’ll want to do everything you can to grow it as much as possible. And one easy way to do this by opening a Lifetime ISA. Lifetime ISAs (LISAs) can be taken out if you’re aged 18-39 years old and they’re for buying a first property or for your retirement.

You can put in up to £4,000 each year into your LISA until you’re 50. And the Government will give you a 25% bonus on your savings, up to a maximum of £1,000 a year.

When you’re a first time buyer it’s vital that you find the right mortgage. And that’s where our team of expert advisers can help you: we can explain all your options to you to help find the right mortgage for you.