Government Schemes for First Time Buyers

With house prices rocketing skywards at a steady trajectory, it might seem as though your first house is a long way off. Renting  is convenient for some, but for others the money spent on renting could be used to buy property. Indeed, a pretty well-paid job, VERY stringent savings or - in many cases - a lump sum brought about by inheritance or something similar is the only way to buy a property in St Albans. These are not particularly viable options for the majority of first-time buyers.

There are, however, a number of schemes available to help you on your journey of buying your first property; take a look at the schemes below and find out how these could help you.

Help to Buy

If you have a deposit of around 5%, then the Help to Buy scheme could be the ideal option for you. If you are looking to buy a new build property that costs no more than £600,000, you can take out an equity loan and borrow 20% of the purchase price interest-free for the first five years. The remaining 75% will be covered as part of a standard mortgage. Cheaper rates (generally, make sure you compare mortgage deals too!) are brought about here - the idea being that you will pay less interest on a 75% mortgage than a 95% one. The equity loan is one of the most popular schemes amongst first-time buyers, providing a discount that would be difficult to find otherwise.

Help to Buy Mortgage Guarantees are obtainable for some old and new property around the UK. This means whilst you still need to provide 5% of the value of your property, the government in this case will guarantee up to 15% of the remaining value to the lender, should you fall behind. The idea here is to encourage lenders to lend more readily, for cheaper rates. However, you are still responsible for your mortgage repayments.

Starter Homes Scheme

The Starter Homes Scheme is aimed specifically at first-time buyers under 40 and will allow them access to one of 200,000 new homes that are being built - offering them a 20% discount from the market price. This does not apply to new homes worth more than £250,000, but is a beneficial way to get a foot on the first rung of the property ladder.

Help to Buy ISA

A tricky one, this. Basically, the government will offer you £50 for every £200 that is saved in the ISA, but it cannot be used as a deposit - it is used to pay off the mortgage itself. Though this does help enormously in the long run, first-time buyers are still stuck with the difficult deposit conundrum.

Shared Ownership

Shared ownership allows you to purchase a share of a Housing Association home - from 25% to 75% - and pay rent on the rest of it, with the opportunity to buy back chunks as and when you can. This allows you all important partial ownership of a property, but in more manageable chucks.



If any of these offers seem helpful to you, you can find a local Help to Buy agent across the country here: https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/

If you want any advice on help to buy schemes in the St Albans area, or need help finding a house to apply them to, then contact us at Daniels Estates.

 

References:

http://qa.zoopla.co.uk/discover_preview/property-news/bank-of-england-ratesetters-divided-18-02-15/

http://www.zoopla.co.uk/discover/first-time-buyers/first-time-buyer-government-scheme/#4HWoJ4vWsL2hwpED.97

https://www.gov.uk/affordable-home-ownership-schemes/overview