We’ve already shown you the most and least affordable areas in the UK for first-time buyers and the best London postcodes to buy in, but what about the next step?
Saving up a deposit is one thing, but there are even more hurdles to jump before you can pick up the keys to your own place.
However there are schemes like Help to Buy and shared ownership that could help you afford your first home.
To help you get on the ladder, we took a look at the financial help available for the nation’s first-time buyers.
Help to Buy
Around 340,000 properties have been purchased through the Help to Buy equity loan scheme.
Buyers putting down a 5% cash deposit can borrow up to 20% of the cost of a new-build (40% in Greater London), and the loan is repaid as a percentage of the proceeds when it’s sold or sooner if you can afford to.
It’s interest-free for five years, and in year six you’ll be charged at a rate of 1.75%, increasing annually by adding the Consumer Price Index plus 2%.
Different maximum property price thresholds apply across England’s nine regions, ranging from £600,000 in London to £186,100 in the North East.
England only; a similar scheme operates in Wales; The Help to Buy (Scotland) Smaller Developer scheme ends on April 5.
This allows people with a maximum household income of £80,000 (£90,000 in London) to buy a share in a new or resale home. This is repaid via a mortgage, and the balance is covered through monthly rent to a housing association.
The deposit’s low as it’s only required for the share being bought, and you’ll be able to buy more — called staircasing — if you want and can afford too, but there’s no pressure to do so.
The minimum initial stake is being reduced from 25% to 10% to open up the scheme to more aspiring buyers. England only; Scotland and Wales have their own schemes.
Introduced last year, this offers homes at discounts of 30-50% of the market price to key workers and local people who are struggling to buy. Post-discount prices are capped at £250,000 and £420,000 in London.
The same income thresholds apply as for shared ownership, but owners will be unable to increase their stakeholding, allowing the same discount to apply to subsequent sales and giving the same opportunity to future buyers.
These homes are in limited supply but 1,500 are planned throughout England by March 2023.
Discount market sales
Some councils and local authorities offer a small number of new homes for low income households at 25-50% discounts.
Individual councils set their own criteria but to be eligible, buyers are normally expected to live or work in the borough. England only.
Mortgage guarantee scheme
This scheme, running until the end of 2022, is aimed at increasing the supply of 5% deposit mortgages by supporting lenders through a government-backed guarantee.
It’s available to credit-worthy buyers with a 5% deposit, on properties with a purchase price of up to £600,000. Available throughout the UK.
Some housebuilders operate their own schemes to make buying more affordable. These include Home Reach, who work in partnership with heylo to offer part-buy, part-rent homes, on a similar basis to shared ownership, to people who can’t afford to buy outright.
They can purchase shares of up to 75% of the market value, and pay rent on the balance to heylo, with the opportunity to increase their stake later on. England only. Weston Homes’ First-time SecureBuy initiative is worth a look when buying a first home off-plan as it allows you to reserve a home for just £500, and requires only a 5% deposit.
Apply for a mortgage or Help to Buy six months before completion, and benefit from any increase in value.
Open an Lifetime ISA account and you’ll be able to save up to £4,000 per year, attracting a very handy 25% government bonus, to put towards a deposit on your first home.
To be eligible, you must be aged 18-39, buy with a mortgage and the property can’t cost more than £450,000. Available throughout the UK.
Credit: Original article published here.