What schemes are available to help first time buyers? Research suggests a young person can take up to 18 years to save the deposit for their first property. Many first time buyers have to rely on the bank of mum and dad. The government also has schemes available to help you get a foot on the ladder
1. Help-to-Buy Isa
Launched in December 2015, the help to buy ISA is a scheme where money is saved to help fund a deposit. Once you have saved, the government will give a 25% bonus. You can then use the savings to help fund a deposit.
You can save up to £200 a month and start with a lump sum of £1200. The maximum bonus is £3,000. So if you have saved £12,000 the government will add a further £3,000. There is a limit on the value of property you can buy. The maximum purchase price is £250,000 or £450,000 for a London property.
The average value of a property purchased using the scheme stands at £172k.
2. Help-to-Buy loans
In this scheme, the government will lend up to 20% of the price of a new build property (40% for London). This helps with the amount of the mortgage you can access. It also gives access to better mortgage deals. You only need a 5% deposit to access this scheme. If you use the scheme for a new build property, interest is not charged for the first 5 years.
The government has so far lent £10bn in this scheme. Click here to find out more.
3. Shared ownership
This is a part ownership and renting. In effect, you own the house with the government owning a part and you paying rent on that element.
You can borrow between 25% and 75% of the property. You pay rent on the remainder.
There are only certain homes you can buy on this scheme and these will usually be marked up on Zoopla or Rightmove as a shard ownership opportunity.
You can also “staircase” over time. This means you buy back more of the property over time. You will no longer pay rent on any part you buy. This means that you own a larger share of the house.
To be eligible you must be a first time purchaser, or if you have owned a house before can longer afford it and your annual household income is less than £80,000 (£90,000 in London)
This is only available in England with NI, Scotland and Wales having their own schemes
The average age of someone using this scheme is 35. Click here to find out more.
4. Starter homes
This scheme began in 2014 after the government announced it would build homes to be sold to first time buyers at a discount of 20% . You have to be between 23 and 40 to qualify for this scheme.
To be eligible you should have a combined household income of less than £90,000 in London or £80,000 in the rest of the country.
The houses are generally on brownfield sites, land that was previously used for commercial and industrial purposes.
Click here to search for a starter home.
5. Homes for Londoners
This scheme aims to help low and modest income earners buy or rent at an affordable price.
You part buy and part rent the property – mostly for newly built homes but some other properties are included.
There are eligibility criteria based on earnings.
You can’t buy a home on the open market. Click here to search for houses which qualify.