How first-time buyers can become homeowners with government backed schemes

For Sale & sold home

As anyone currently looking to buy their first home will know, getting on the property ladder these days isn’t the easiest task, with home ownership often being a difficult goal to achieve for most people.

Luckily, the government currently has a number of schemes available to help first-time buyers realise their dream of homeownership by offering them a helping hand in the matter.

There are several different ways that first-time buyers can seek out government help, each of which come with their own advantages and setbacks, so it is important that you carefully consider which one, if any will be the right one for you. Especially as many are only valid for use on new property developments.

Shared Ownership

Failure to secure a mortgage for the full price of the property is often the barrier to homeownership. For anyone in this predicament, the shared ownership scheme offers the perfect solution as it allows you to buy a certain percentage of the property, while paying reduced rent on the portion that you do not own.

Unlike many of the other government schemes, this one is actually available to anyone, regardless of whether or not they have previous owned a property, as long as they currently do not own one. There is also an income limit to qualify for the shared ownership scheme which has a cap of £80,000 – or £90,000 for those living in the capital. Of course, this does mean that you will still have to pay rent alongside your mortgage, and if you decide to purchase the remaining percent of the property, this will be calculated at the time of purchase, not when you originally bought your first portion of the property.

Right to Buy

Available exclusively to council tenants, the government’s Right to Buy scheme allows secure tenants to buy the property they are currently renting at a heavily discounted rate, once they qualify for the scheme.

To be eligible for the Right to Buy discount, a tenant will have to be listed as a secure tenant in the property, and has to have rented property from a public sector landlord for a minimum of 3 years – although this time period does not have to be consecutive. What most people may not know, however, is that being a public sector tenant doesn’t strictly apply to to simply renting from the council. Those who are in accommodation rented from the armed services, an NHS trust, or a housing association are all eligible for the scheme too.

Help to Buy Equity Loan

Although the Help to Buy ISA scheme is sadly coming to an end on 30th November 2019, the government still has an equity loan scheme available under the Help to Buy umbrella of homeownership assistance. Available to both previous home owners and first-time buyers, the Help to Buy Equity Loan is designed for those who are only able to save a small deposit, that would not allow them to qualify for a traditional mortgage.

The equity loan solves this issue by making up the difference between the mortgage you are able to secure and the full sale price of the property you intend to buy. For example, you would save a 5% deposit, take out a mortgage worth 75% of the full sale value, and then the Government equity loan would make up the remaining 20%. To account for the higher cost of buying a property in the capital, those living in London could be eligible for an equity loan of up to 40% of the property value.