Helping you own your first home
Many people in the UK say they would like to buy their first home…but they also say that they don’t have enough money for a deposit – and even if they could find the money for a deposit, perhaps with parental support – the monthly mortgage payments are often perceived to be too onerous.
However, many people really want to buy a home of their own, rather than renting.
- The average age of a first-time buyer in the UK is 34 years old.
- This is six years older than the average age of a first-time buyer in 2007, which was 28 years old.
- The average deposit placed by a first-time buyer in 2019 was £46,200.
- The average first-time buyer mortgage in 2019 was £185,300.
- £231,500 was the average price of a home bought in the UK by a first-time buyer in 2019. The average deposit for a first-time buyer in London (£110,000) is almost as much as the total mortgage for a buyer in the North of England (£112,000).
- There were 356,000 first-time buyers in 2019, which was 163,000 more than in 2009.
These figures are interesting, rather worrying and, possibly, likely to make you to think there is little chance of getting your own home. If you want to buy a home in the southeast of England, for example, you will find that the house prices are significantly higher than the average of £254,000.
However, the UK government has supported new homebuyers for many years in the dream of your own home – if you fit the criteria in any of the varied schemes available at this time – you could join the 208,000 households who have used them to get set on the way to home ownership.
Please note: These schemes are subject to availability, eligibility and other changes. For more details go to: ownyourhome.gov.uk
These government schemes are currently available:
The Mortgage Guarantee Scheme
This is a UK wide government scheme to help to increase the supply of 5% deposit mortgages for credit-worthy households by supporting lenders to offer their mortgages through a government backed guarantee on new 95% mortgages until 31st December 2022.
This scheme launched in April 2021to enable homebuyers to buy a home with a 5% deposit, for example, a home priced at £300,000 could be secured for £15,000 cash.
It works by the government offering the mortgage lender an option to purchase a guarantee on the mortgage in the event of the homebuyer failing to pay the mortgage instalments.
The borrower remains responsible for paying the repayments.
Help to Buy: Equity Loan
This is a government scheme to help people across England to buy a new-build home. Buyers must have at least 5% of the price of the home. Will German, director of Help to Buy at Homes England, said: “Help to Buy has already helped more than 270,000 people into home ownership and 82% are first-time buyers. The new Help to Buy builds on this success with first-time buyers in front of mind.
We’re pleased we can help homebuyers with smaller deposits to own a home, at a time where there are fewer options open to them.”
- Buyers have full ownership and the Government has an equity share up of to 20% (up to 40% in London), until you repay the equity loan.
- This scheme enables people to buy a new-build property with a small deposit.
- Homebuyers must contribute 80% of the home’s price, for example, with a minimum 5% deposit and up to 75% mortgage. In London, homebuyers must contribute at least 60% of the home’s price.
- The new Equity Loan scheme was launched on 1st April 2021. It is for first-time buyers and includes regional property price limits to ensure the scheme reaches people who need it most. The new scheme will run until March 2023. As with the previous scheme, the government will lend homebuyers up to 20% of the cost of a newly built home, and up to 40% in London.
The new regional price caps for Help to Buy are:
· North East: £186,100.
· North West: £224,400.
· Yorkshire and the Humber: £228,100.
· East Midlands: £261,900.
· West Midlands: £255,600.
· East of England: £407,400.
· London: £600,000.
· South East of England: £437,600.
If you can't afford to buy 100% of a home, you could buy a share of a home instead and pay rent on the rest. The share would be at least 5% of the price of the home.
· Ownership: Full ownership. The Government holds an equity share up of to 20% (up to 40% in London), until you repay the equity loan.
· Headline benefits: Enables people to buy a new-build property with a small deposit.
· Headline requirements: Homebuyers must contribute 80% of the home’s price, for example, with a minimum 5% deposit and up to 75% mortgage. In London, homebuyers must contribute at least 60% of the home’s price.
Right to Buy
Council tenants in England can use the Right to Buy scheme to buy the home that they rent with a discount of up to £84,600 (£112,800 in London).
· The Right to Buy scheme helps eligible council and housing association tenants in England to buy their home with a discount of up to £112,800 (£84,600 outside London).
· With a larger discount of up to £84,600 (£112,800 in London) this could be the perfect time to decide if it’s the right choice for you.
· Your landlord is legally obliged to regularly provide you with factual information about the Right to Buy scheme.
· The Government’s Right to Buy Agent service also offers free and impartial advice on Right to Buy and, if you decide home ownership is the right choice for you, our advisers can help you through the process of buying your home.
Other Government schemes can be seen online:
First Homes: https://www.ownyourhome.gov.uk/scheme/first-homes
First Homes is a new scheme designed to help local first time buyers and key workers onto the property ladder, by offering homes at a discount of 30% compared to the market price. This could save each buyer an average of £70,000, making deposits and mortgages more affordable. In some areas the discount could be as high as 50%, providing even greater savings.
The discounts will apply to the homes forever, meaning that generations of new buyers and the local community will continue to benefit every time the property is sold