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Government Schemes for First-Time Home Buyers

Couple hugging after getting the keys to their new home

If you’re a first-time buyer, several government affordable home ownership schemes are available to help you get on the property ladder. Read on to find a suitable scheme for you.

 

Help to Buy: Equity Loan

With a Help to Buy: Equity Loan, the government will lend first-time buyers up to 20% of the cost of a newly built home and up to 40% in London, subject to eligibility, terms and conditions.

Eligibility

First-time buyers aged 18 or over, who are purchasing a property in England, can apply for a Help to Buy: Equity Loan on new-build properties.

There are regional price limits on the homes that you can buy with a Help to Buy: Equity Loan. For London, the maximum purchase price is £600,000.

Read our Help to Buy: Equity Loan guide for full eligibility criteria.

Pros of the scheme

Help to Buy is widely available across new-build homes, sold by registered homebuilders and provides a quick way to get on to the property ladder. Due to the 20% government loan (or 40% in London), you will require a much smaller deposit. Even better than that, your Help to Buy: Equity Loan is interest-free for five years.

Need to know

The Help to Buy: Equity Loan scheme is only available in England, although similar schemes have been made available in Scotland and Wales.

The Help to Buy: Equity Loan scheme will close to new applications at 6 pm on 31 October 2022. The property must complete before to the scheme ends on 31 March 2023.

Search for your new Galliard home available with Help to Buy here.

 

First Homes scheme

Designed to assist people in buying a property in the area they live and or work in; the First Homes scheme allows first-time buyers purchasing in England to buy a home for 30% to 50% less than its market value. 

All potential buyers must meet the First Homes eligibility criteria, which is assessed by the relevant local council to the property you are buying.

Eligibility

To be eligible for the First Home scheme, you must be 18 or older and a first-time buyer. To ensure that the scheme helps the purchasers who it is intended for, buyers’ combined income is capped at £90,000 in London or £80,000 anywhere else in England.

There are also property price caps. The home you are buy cannot cost more than £420,000 in London or £250,000 anywhere else in England after the discount is applied.

You will need to be able to take out a mortgage that covers at least 50% of the property purchase price.

Pros of the scheme

Because of the discount, you’ll require a smaller deposit and a smaller mortgage.

Need to know

Many local authorities will prioritise key workers, making it difficult for purchasers to access the scheme outside of the stated professions. 

The scheme is only available on selected new-build homes in England built for the First Homes scheme. 

When the time comes to sell your property, you can only sell the home to someone eligible to buy a First Home, and the discount you received must be reapplied.

 

Lifetime ISA

With a Lifetime ISA, you can save up to £4,000 every tax year towards your first home, and the government will add a 25% bonus on top of what you save. If you pay the maximum amount, this could equate to £1,000 a year. As it is an ISA you will earn tax-free interest on whatever you save.

Eligibility

You must be between 18 and 39 to open a Lifetime ISA and a resident in the UK. 

Anyone can open a Lifetime ISA; however, only a first-time buyer buying a property for no more than £450,000 can use it towards a property purchase.

You must use a conveyancer or solicitor to facilitate the purchase and be buying the property with a mortgage.

Pros of the scheme

If you’re buying jointly, and the joint buyer also has a Lifetime ISA, they can use their savings and government bonus too.

Additionally, you can use the Lifetime ISA with other government home-buying schemes, including the Help to Buy: Equity Loan.

Need to know

Any savings you pay in to your Lifetime ISA will count towards your annual ISA limit.

When you turn 50, you will not be able to pay into your Lifetime ISA or earn the 25% bonus, but your account will stay open, and your savings will still earn interest.

Your Lifetime ISA will need to have been running for a year to be able to use it towards your first home.

For further tips on saving for your first home, take a look at our handy guide.

 

Shared Ownership

Designed to help potential buyers with smaller deposits get on the property ladder, such as first-time buyers, Shared Ownership is a scheme that allows you to buy a 25-75% share of a property and pay rent of up to 3% on the remaining share. 

Eligibility

To take advantage of Shared Ownership, you must be 18 years or over. As with the First Homes scheme, buyers’ combined income is capped at £90,000 in London or £80,000 anywhere else in the UK. 

You cannot own another property in the UK or abroad, but you could have previously owned and sold or be in the process of selling your home.

Pros of the scheme

Unlike many other government schemes, Shared Ownership is not limited to first-time buyers, making it a good option for people looking to upsize.

Need to know

Shared Ownership properties are sold by Housing Associations and only properties that have been specifically built for the scheme can be bought this way.

 

If you’re a first-time buyer looking to take your first step on the property ladder, contact the Galliard Sales Team on 020 7620 1500 to find out how we can assist you.

Already know what you’re looking for? Browse our collection of new-build homes here.

Edited: 16th September 2022