A new home is a big investment, but you’ll be relieved to hear that you have options when it comes to financial assistance. Whether you’re already on the property ladder or you’re a first-time buyer, house buying schemes can help you kickstart your journey as a homeowner and shave off some of the additional costs associated with your home.
What is a home buying scheme?
With 100% mortgages now a thing of the past, climbing up the property ladder is becoming more and more difficult for both first-time and repeat buyers to achieve. A new home buying scheme is a form of financial assistance that allows a buyer to offset or reduce the cost of purchasing a home, helping to prevent eligible parties from being priced out of property ownership.
First time buyer schemes
Schemes for first time buyers are designed to reduce the financial strain of a buyer’s first property purchase. These can be a single deposit or long-term mortgage assistance depending on the scheme.
First Homes scheme
What is the First Homes scheme?
The First Homes scheme is a government initiative aimed at reducing the cost of new builds for first time buyers. With First Homes, between 30 and 50% of the market value can be removed from the price of your home. This initiative is a collaboration between new build developers and the government.
Who qualifies for First Homes scheme?
To qualify for the First Homes scheme, you must be a first-time buyer of 18 years old or more, and you must be able to get a mortgage for at least 50% of the value of your home. Your income from the previous tax year cannot exceed £80,000 or £90,000 when buying a property in a London borough.
If you’re buying a new build, the home must have a maximum value of £250,000 after the First Homes discount is applied (£420,000 if it’s located in a London borough). That amounts to a maximum property value of £500,000 if 50% is deducted, or £840,000 in London.
How to apply
To apply for the First Homes discount, you should contact the developer selling your home. They’ll help you to fill out the application and submit it to the local council, who will determine your eligibility for the discount.
Lifetime ISA
What is a Lifetime ISA?
A Lifetime ISA (or LISA) stands for a Lifetime Individual Savings Account. These bank accounts are non-taxable and are designed to help you to accumulate savings for the future. You can deposit up to £4,000 into your LISA every year, and the government will match your annual investment with 25% of its value. That means that you can save up to £5,000 a year in your LISA if you make a personal contribution of £4,000.
You can only access these funds during major life events such as retirement, illness or when buying your first home. This means that all of your savings - including the government contribution - are available to you as a first-time buyer.
Who qualifies for a Lifetime ISA?
You can open a LISA at any age between 18 and 40, although you must make a deposit before you reach 40 years old if you want to keep your account. Other than age, there are no requirements for setting up a LISA.
If you’re over 50 years old then you can no longer make additional deposits into your LISA, although your funds will continue to accumulate interest until you withdraw them. You can use your LISA savings to buy your first property at any age, whether you’re 20 or 55.
How to apply
You can apply for a LISA through your bank. Speak to a teller, a financial advisor or an expert at the bank to find out more about your options.
Affordable housing schemes
Whether you’re moving for work, upsizing for a family or simply looking for something new, it can be difficult to climb the property ladder after several years of inflation. Luckily, there are plenty of home buying schemes available to you if you find your ideal home to be out of reach.
Shared ownership
What is shared ownership?
Shared ownership is a government mortgage scheme that allows developers to sell a home as a percentage share. This scheme is intended to help families who can’t afford to make house payments. By reducing the percentage of your home that you own, both the deposit and the mortgage are diminished.
Every developer will offer different percentages of shared ownership. You may be able to purchase the remaining share of your home in future, depending on the policy.
Who can buy under shared ownership?
Similarly to the First Homes scheme, your household needs to have an annual income lower than £80,000 per year (or £90,000 in a London borough). You’re also eligible for shared ownership if you’re disabled and can’t afford payments on an accessible property. You also need to meet certain additional criteria, although this varies depending on your circumstances.
How to apply
To apply to buy a home with the shared ownership program, you’ll need to go through an organisation selling houses under the scheme. This could be either a developer or a housing association. Once you’ve identified the house you’d like to buy, you need to hire a solicitor to help you make the purchase.
Whether you’re a first-time buyer or making a move across the property ladder, buying a new home can be overwhelming. Browse through some of the available buying schemes we offer, such as Own New Rate Reducer, Part Exchange or Move Simple or chat with a Homes Adviser today!
