Buying your first home can seem overwhelming, but there are several UK schemes designed to help first-time buyers achieve homeownership. In today’s blog, we look at what options are available to help you get on the ladder.
1. Shared Ownership: Buy a Share, Pay Rent on the Rest
Shared Ownership allows you to buy a portion of a property (typically between 25% and 75%) and pay rent on the rest. This lowers the amount needed for a deposit and mortgage, making it a more affordable route to homeownership. Over time, you can increase your ownership by buying additional shares, a process known as staircasing, until you eventually own the entire property.
2. Income Booster: Boost Your Mortgage with Family Support
One high street lender’s income booster scheme mortgage allows a family member, such as a parent, to help you qualify for a larger loan by factoring in their income. The family member does not need to co-own the property, giving you full ownership from the start. This can be a great option for first-time buyers in areas where house prices are high, and their own income may not be enough to secure a large enough mortgage, and helps your income go further on the property ladder.
3. 100% Mortgage for Shared Ownership: No Deposit Required
A recently launched scheme, the shared ownership 100% mortgage is designed for those who are unable to save for a deposit. With this option, you can secure a mortgage for the full value of your share in the property, allowing you to buy without a deposit. This makes it an attractive option for buyers who have a steady income but struggle to save for upfront costs.
4. Lifetime ISA: A 25% Government Bonus to Boost Your Deposit
The Lifetime ISA (LISA) is a great savings option for first-time buyers. You can save up to £4,000 per year, and the government will add a 25% bonus on top—up to £1,000 each year. This bonus can be used towards the deposit for your first home, making it a helpful way to grow your savings faster. The LISA can be used for properties valued up to £450,000, and you can open one if you’re aged between 18 and 39.
5. 100% mortgages
Another exciting option for first-time buyers is the 100% mortgage, specifically designed for those who’ve been renting but struggle to save for a deposit. Unlike traditional mortgages, this option assesses your mortgage affordability based on how much rent you currently pay, rather than requiring a deposit. This allows renters with a steady track record of payments to transition to homeownership more easily.
There are lots of options out there for first-time buyers to overcome financial barriers to homeownership. Each scheme has its own set of benefits and potential drawbacks, so it’s important to evaluate which one aligns best with your circumstances. Contact us today to talk through your options and find a solution that works for you.
Annabelle Bezant, October 2024
