The First-Time Buyer Government Scheme
Our next option is the mortgage guarantee, a first-time buyer scheme launched in 2021. While this scheme officially ended in December 2022, there remain several lenders who will consider first-time buyer mortgage applicants with a 5% deposit.
The concept is that where a lender might otherwise turn down a first-time buyer due to the risks of lending to a high Loan to Value, the first-time buyer scheme offered a government guarantee of up to 80% of the property value.
There is the potential for this first-time buyer scheme to be renewed or extended or possibly replaced with another initiative which will help more applicants purchase their first home, provided they have saved at least 5%.
Using the Right to Buy First-Time Buyers Scheme
Right to Buy is a first-time buyer scheme aimed at people living in council properties, with a discount on the usual market value. Tenants can apply for help for first-time buyers to buy the property where they live as long as they have been a tenant for at least three years.
This first-time buyer scheme is open to joint tenants and up to three relatives living together for at least one year.
A first-time buyer can purchase their home with a discount of up to £87,200, although this limit is higher in London at £116,200. Discounts depend on how long the first-time buyer has been a tenant, how much the home is worth, and whether it is a house or a flat.
Right to Buy isn’t a first-time buyer mortgage but is the process by which you agree to buy the home from the landlord, so you’ll still need a mortgage agreement from a suitable lender to move forward.
Applying for Right to Acquire as a First-Time Buyer
Right to Acquire is a similar first-time buyers scheme as Right to Buy but applies to properties owned by a housing association instead of a local council.
The eligibility terms are fairly comparable, and you can use the first-time buyer scheme if you rent from an association, NHS trust or one of the armed services.
If a first-time buyer lives in a council property, they cannot use Right to Acquire and need to apply through the Right to Buy scheme.
The Shared Ownership First-Time Buyer Scheme
Shared Ownership is a first-time buyer scheme that permits a first-time buyer to purchase a proportion of their home if they aren't in a position to buy it outright or don't have a large enough deposit.
A first-time buyer can purchase chunks of the property from 25% up to 75% of the market value and need to pay a nominal rent to the landlord for the rest of the home they do not own.
If you want to use Shared Ownership as a first-time buyer, you will need a deposit of between 5% and 10% of the value of the proportion you’re purchasing and will still require a first-time buyer mortgage to cover the transaction.
This first-time buyer scheme means you can buy a smaller share, from 25% of the home, and then apply for a larger proportion of ownership over time, potentially increasing your share up to 100% by buying in gradual stages.
Help for First-Time Buyers With Disabilities
There is additional support for a first-time buyer with disabilities using the Shared Ownership first-time buyer scheme. The Home Ownership for People with Long-Term Disabilities fund helps people who qualify for extra help.
In most cases, that applies to any first-time buyer who cannot purchase a home through any other scheme, normally because they need a specific type of property, such as a flat with a step-free ground floor entrance.
However, some councils have different priority groups, and your position as a first-time buyer will depend on the support available in your area.
First-Time Buyer Schemes for Older Adults
Another potential first-time buyer scheme is designed for buyers aged 55 or above, who can use the Shared Ownership initiative to buy up to a maximum cap of 75% of the property value.
This scheme works like any other Shared Ownership first-time buyer arrangement, but the difference is that once the individual buys up to 75% of the property, they cannot purchase further ownership and do not pay any rent on the 25% balance.
The First Homes First-Time Buyer Scheme
Our final first-time buyers scheme is called First Homes and provides lower-cost housing for people who are on a lower income or fall into another priority group.
A property can be included in this first-time buyer government scheme if it has a discount of at least 30% on the usual market value and is sold to someone who meets the criteria. After the discount, the property cannot be sold for over £250,000 or £420,000 within London.
To be eligible for this first-time buyers scheme, you will need to have a household income of under £80,000 and £90,000 in London and be able to secure a first-time buyer mortgage to cover at least 50% of the agreed sale price.
Professional Help for First-Time Buyers
With so many potential schemes and initiatives to choose between, it can be useful to consult an experienced, independent broker, both to recommend the first-time buyers scheme that is most suitable and to help you secure the mortgage borrowing required.
Revolution Finance Brokers is a whole-of-market broker and provides independent support to ensure you make informed, confident choices about your borrowing as a first-time buyer.
