Government Schemes Designed to Help First-Time Buyers onto the Property Ladder

Getting a foot on the property ladder can be a tricky business if you are a first time buyer, with high deposits demanded by the banks before they will consider lending.  However, there are other ways to buy your dream home if you have little in the way of a deposit:

Help to Buy scheme 
This scheme is funded by the Homes and Communities Agency (HCA) and will assist qualifying buyers of new-build properties who can provide the minimum 5% deposit.  The scheme will then fund another 20% of the purchase cost, which means that the buyer only has to obtain a mortgage for the remaining 75% of the purchase price.

The scheme, which is unsubsidised, comes at a cost, and can only be regarded as a short-term fix designed to get buyers through their front door.  If it is not repaid within the first 5 years, the cost of that finance will escalate.

NewBuy – deposit help when buying new homes
This scheme allows you to buy a new home with a 5% deposit.  The government guarantees the mortgage needed for the remaining 95%.
This scheme is for:

First-time buyers and existing homeowners;

  • A newly built flat or house costing no more than £500,000;
  • People intending to use the property as their main home.

Please note that the NewBuy scheme cannot be used with any other publicly funded mortgage scheme.

Shared ownership schemes
Shared ownership is where you buy a share of a home from the landlord, who is usually the Council or a Housing Association, and rent the remaining share.

You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the property’s full value.  You then pay a reduced rent on the share you don’t own.  In the majority of cases, you have the option to buy a bigger share in the property later on (up to 100% of its value).

These schemes are aimed at people who don’t earn enough to buy a property outright.  This could also include key workers such as nurses, teachers and police officers, as well as those aged 55 and over or people with special needs.

Shared ownership schemes are also only available on certain, specified properties, which means that your choice of property and the area in which you buy will be somewhat dictated by availability of eligible properties.  You can't simply find a property you like and then apply for a grant to buy it.

All shared ownership homes in England are offered on a Leasehold only basis.

Right to Buy/Right to Acquire
This scheme is for tenants who rent their home from their Local Council or Housing Association and allows those who qualify to buy their home at a discount.  The size of the discount varies depending on where you live and the type of property you want to buy.

Please bear in mind that if you are able to take advantage of one of these schemes, lenders will still take steps to ensure that you can afford to repay your mortgage.

It is imperative that you seek legal guidance on the advantages and disadvantages of entering into any of the above schemes before making your decision. All of our Residential Conveyancers are highly experienced in every source of funding available to help clients onto the housing ladder. If you would like further information regarding any of the schemes, please contact me, Samantha Evans, at Terry Jones Solicitors on 01743 285888 or email me samanthae@terry-jones.co.uk.

 

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