Help-to-buy bye: Hello first time buyer schemes

“Heigh ho heigh ho, it’s off to home we go…"

Once upon a time (ten years ago), there existed a double-dip recession and a property struggle among the townsfolk who needed a kindly prince to trot along with a first-time buyer scheme and save them from their plight. Along came a government scheme to boost the real estate market. An equity loan scheme so helpful in fact that it enabled us lowly buyers to borrow up to 40% of our property’s value. Goodness gracious were we fortunate.

Goodbye Help to Buy

It is with great sadness, therefore, that we say farewell to the late, great Help to Buy scheme of yesteryear. Registrations for such a coo closed last October in a puff of smoke, leaving some of us grasping at disappearing floorplans and wondering what in the magic mirror we’re going to do now.

Mortgage rates and house prices are climbing up the walls like ivy. A cost of living crisis wreaks havoc across the land leaving many of us unable to afford our own castle. But you know what they say. When one door closes, a garden flat’s French windows open via seven other government-approved first-time buyer schemes. Or something like that.

Who needs the archaic help-to-buy scheme anyway when you’ve got seven eager dwarves ready to hoist you atop Rapunzel’s property ladder instead? Time to get all Snow White about it and have your pick of the help. Now that the Huntsman is fully out of the picture…

Illustration of a man and woman brainstorming and writing on a whiteboard

Don’t be bashful, take advantage of the First Homes scheme  

This little chap may seem small, but is raring to help all first time buyers with a surprisingly large 30% discount on new build homes. Not one to be sniffed at! Are you on the look out for a fresh out the box new build? If you had a household income of £90k or less last year, try this scheme on for size. Each council is setting their own eligibility rules (like a folk tale in itself). You may have some hoops to jump through first – such as only local buyers or key workers need apply for example.

There’s another caveat to bear in mind. Whatever discount you are given will be taken from your sale price should you sell up in the future. What’s more, there isn’t a dedicated website or portal you can visit to apply. You’ll have to take on the quest yourself to track down your nearest developers offering the scheme. We believe in you, first time buyers! Challenge accepted…

Wake up sleepy! Don’t rest on your Lifetime Isa
Morning sunshine. Fancy earning a tasty 25% bonus for your first house purchase? Then a lifetime Isa could be your flower-strewn path to happiness. The government is offering a payment of up to £1,000 a year should you save up the maximum £4,000. This little helper is like the all inclusive holiday of schemes with Isa’s only available for those aged 18 to 39. Maximum house prices are limited to £450,000. Cash is available after the initial 12 months of saving.

These Isa’s are also limited per person not home. If you’ve found your prince charming/dwarf du jour, then why not both open a lifetime Isa and reap the benefits before buying your gingerbread house. Should you decide to spend the money on a magical beanstalk instead of a home, however, you’ll have to wait until you reach 60 to withdraw the cash. OR you may forfeit a 25% penalty for withdrawing cash early. The choice is yours…

Clever Doc has a Mortgage Guarantee scheme up his sleeve
What’s that, Doc? According to our wise old chum, the government has generously decided to extend its 95% mortgage guarantee scheme. This will help us humble townsfolk to purchase an abode valued up to £600,000 with a 5% deposit. Delightful news, Doc! It re-launched in April 2021 after the pandemic blew a few out of the water. This particular scheme isn’t limited to new-builds. Nor 18-39 year olds!

As with all these helping hands however, there is a cautionary tale to beware. This scheme is no exception. Put it this way – a 95% mortgage may seem appealing now, but holds a greater risk of falling into negative equity down the line. As house prices plummet, your loan could end up higher than your property’s value. As our sage advice more oft than not goes; save save save for the highest deposit you possibly can first.

Grumpy no more! Try a Shared Ownership
This one may pop a smile on ol’ Grumpy’s mug. Shared ownership is an initiative that involves buying your home for as little as 25%, then paying rent on the rest. It doesn’t mean Grumpy lugs here has to share his home with Happy and Dopey and all the others, either.

Do remember that if you need to borrow the money for your 25% stake, you will then be paying both rent and a mortgage which is likely a greedy chunk of your wages each month. But hey – you’ll have two feet firmly on the property ladder with Bashful and Sleepy as your neighbours, not flat mates no more. Finally!

Hey, Dopey, you’ve a Right to Buy
Should you have spent the last three years living in a council house or flat in England, you are eligible to buy your home with the Right to Buy scheme at a whopping 70% discount, up to a total house price of £116,200 in London. Cripes! If you’re reading this and thinking boo and hiss because you’ve been living in yours for under three years – you can either wait the wait, or benefit from a 35% discount instead (after the first twelve months that is).

And if you’re reading this thinking, hey! I’ve been living in mine for 36 bloomin’ years Dopey! Then bottoms up! Because you can enjoy another 1% discount each year you’ve lived in your council flat or house after the initial five years. Yes, that’s a lot of calculations, but well worth the mathematical gymnastics if you fancy it and we can always help with the sums.

Achoo! Bless you Sneezy, and bless your Guarantor 
For those of us with a less-than-glowing credit score like our Sneezy here, all is not lost. Guarantor mortgages are a CHOO *bless you* welcome aid when it comes to first time buyers on a low income struggling to raise enough of a deposit or increase their credit score. Some guarantor’s mortgages lend up to 100% of the property’s value, but be forewarned – a caveat rears its ugly head this time in the form of an inexplicable bond between you and your guarantor. Waaachoo!

Remember that you will be financially linked with this person once both have signed on the dotted line. If you were to miss a mortgage payment or get into serious debt, your guarantor is usually liable for the shortfall and could even end up losing their own home as well as yours. As you can see, this is not a path to blindly frolic down, but it does provide options where you may have felt lost. Achoooo! Bless you.

Be Happy with a Developer’s Deal
Depending on the developer and where you wish to hang your hat, house builders are starting to offer up incentives for first time buyers in a bid to whip up interest in their developments. There is word of a Save to Buy scheme rom Fairview, for example, who are using renters monthly payments as a deposit for their home. Then, once they’ve accumulated a healthy deposit, they can apply for a mortgage for the home they’re living in already. Dreamy!

While only available in certain parts of the UK, they are looking to offer up the scheme in other areas throughout the year. This sounds like a fairy tale with a happy ending if ever we’ve heard on.

Please note that all content contained within our website is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. We advise seeking professional advice from a legal, financial, or other professional.

Contact us:

alex@daviesdavies.co.uk – Lettings Director (contact for lettings and property management)

mark@daviesdavies.co.uk – Sales Director (contact for sales, new homes and chartered surveying)

020 3820 2492

Davies & Davies Estate Agents, 85 Stroud Green Road, London, N4 3EG

Article & images by Barefaced Studios

You might also want to read other useful blog articles by clicking here.

10 August 2023
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