Since 2013, over 350,000 First Time Buyers have used the Help to Buy scheme to get on the property ladder. The scheme is finally coming to an end in March 2023, with the last new reservations accepted on October 31st 2022. Many hoped that a replacement scheme would take its place, but with widespread economic uncertainty, it seems the government is less inclined to make it a top priority. So, what are your options if you want to get on the housing ladder this year?
The First Homes Scheme
One of the newer alternatives to Help to Buy is First Homes. Launched in June 2021, this government-backed scheme aims to provide homes at a discount of at least 30% to first-time buyers, key workers, and local residents. The scheme is available for new builds only and allows you to buy a property at a discounted price. This discount will then be passed on to future buyers when the property is sold.
The First Homes Scheme is currently available to first-time buyers with a combined household income of less than £80,000 per year (or £90,000 in London) and who meet other criteria. The scheme is being rolled out across the UK, and we are proud to be amongst the first agents to offer this to our buyers.
To learn more about this scheme and check out relevant properties, please contact one of our specialist advisors.
Shared Ownership
Another popular option for first-time buyers is Shared Ownership. This scheme allows eligible buyers to purchase a share of a property (usually between 25-75%) and pay rent on the remaining share. Shared Ownership properties are usually new builds and are available from housing associations or private developers.
Shared Ownership can be a more affordable option for those with a smaller deposit and mortgage, but you will need to meet eligibility criteria and may need to pay additional fees such as service charges and ground rent.
If you're interested in exploring Shared Ownership options, please speak to our experts for guidance and support throughout the process.
Mortgages
95% mortgages
Saving for a deposit and securing a mortgage can be a daunting challenge for first-time homebuyers. The deposit amount, in particular, can seem like an insurmountable obstacle.
While some lenders are wary of offering loans to those with small deposits, there are still a good selection of lenders who loan at 95% loan-to-value (LTV).
Loan-to-value:
Loan-to-value (LTV) is a term used in mortgage lending that refers to the ratio of the amount of the mortgage loan to the appraised value or purchase price of the home. For example, if a borrower puts down a 20% deposit on a £250,000 property and takes out a mortgage for the remaining £200,000, the LTV would be 80%. LTV is an important factor in determining the interest rate and terms of a mortgage loan.
If you're struggling to save for a deposit, a Lifetime ISA (Individual Savings Account) may be worth considering. This account allows you to deposit up to £4,000 a year until you're 50 years old, with the government adding a 25% bonus on your savings up to £1,000 per year. Your funds can be withdrawn at any time to buy a first home worth up to £450,000.
The Mortgage Guarantee Scheme
Another option for those with small deposits is the Mortgage Guarantee Scheme, which offers loans with a 95% LTV. The scheme was set up by the government to make 95% LTV mortgages more available and affordable, and has been extended until the end of 2023.
Under the scheme, the government backs up a portion of the mortgage, reducing the risk for lenders. To use the Mortgage Guarantee Scheme, you would need a 5% down payment and a mortgage with a participating lender. The property must also cost less than £600,000, and lenders like Barclays, Halifax, Lloyds, Natwest, and Royal Bank of Scotland are part of the programme.
Deposit Unlock
Deposit Unlock is a new initiative that has been developed in partnership with lenders and the home building industry. This scheme is designed to help first time buyers and current homeowners to purchase a new-build home with a 5% deposit. With Deposit Unlock, customers can access competitively priced mortgage products that make buying a new home more affordable.
If you're interested in finding out more about Deposit Unlock or would like to explore your options, please don't hesitate to get in touch with us today.
Conclusion
Although Help to Buy has come to an end, there are still plenty of options available to help first-time buyers get onto the property ladder. The First Homes Scheme, Shared Ownership, and the Mortgage Guarantee Scheme are all excellent alternatives that can make purchasing your first home more affordable and achievable.
When considering your options, be sure to assess your financial situation and determine what you can realistically afford. Doing your research and seeking professional advice can also help ensure that you make an informed decision and find a home that meets your needs and budget.
At JLL, we understand the significance of homeownership and are committed to helping our clients navigate the current market conditions.
To learn more about the available schemes and check out relevant properties, please contact one of our specialist advisors and visit our First Time Buyer property listings page.
