Government schemes for first-time buyers

February 20, 2024

First time buyer mortgage scheme

Searching for the most beneficial first-time buyer mortgage scheme to help shorten your route to home ownership?

With the increased cost of living, raised rents, and skyrocketing property prices in the UK, it’s no wonder that first-time buyers are turning to government support when it comes to buying their first home.

Fortunately, to help these prospective property buyers get a foot on the ladder, the UK government has introduced a variety of mortgage schemes for first-time buyers, but what are they, are you eligible, and should you consider applying for one?

Below, the friendly and knowledgeable team of expert mortgage advisors at UKMC answer all of these questions to support your search for the right first-time buyer mortgages government scheme.

Are there any government schemes for first-time buyers?

Put simply, yes, there are a handful of different mortgage schemes for first-time buyers in the UK that you should be aware of before you consider purchasing your first property.

To help you understand which first-time buyer mortgage could be best for you, we explore each one in more detail below.

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme was introduced in 2021 with the aim of increasing the availability of 95 per cent loan-to-value (LTV) mortgage deals. This means first-time buyers would only be required to put down a smaller, five per cent deposit instead of a more substantial deposit (of between 10 and 20 per cent) to secure their home.

The lack of high LTV lending was noticed throughout the Covid-19 pandemic, so the government introduced this scheme to help renters that were constrained by requirements to meet significant deposit requirements.

Available to first-time buyers and home movers across the UK, it can make home ownership more realistic for those struggling to simultaneously rent a property and save enough money for a larger deposit.

First Homes Scheme

Launched in June of 2021, the First Homes Scheme made it possible for first-time buyers to purchase their only or main residence home for a substantial 30 to 50 per cent less than its market value.

However, this scheme is only available in England and applicable for either new homes built by developers or homes purchased through an estate agent where another individual purchased the property using the same scheme.

You’ll be eligible for this scheme if you’re a first-time buyer (for joint applications, both individuals must be first-time buyers), at least 18-years-old, and earning less either individually or jointly than £80,000 a year pre-tax or £90,000 if you’re looking to buy in London.

You must also be eligible to obtain a mortgage to cover the cost of at least half the price of the property. This significant discount for first-time buyers is also subject to council-set criteria for local areas, which might prioritise key workers, locals, and those on lower incomes.

Lifetime ISA

This Lifetime ISA (Individual Savings Account) was launched in 2017 to replace the Help to Buy ISA. This savings account has two purposes – it can either be used to help you buy you first home or saved to be used later in life.

Into this savings account, prospective first-time buyers can contribute up to £4000 each year, which the government will then add a 25 per cent bonus to (up to £1,000).

Once you’re ready to use these savings, you must ensure that you’re using them to purchase a property that costs £450,000 or less using a mortgage and that you’re buying this property at least 12 months after your first Lifetime ISA payment.

The provider of the Lifetime ISA will also only release the funds to a conveyancer or solicitor, so you must use a professional to purchase your first home.

Shared Ownership Scheme

While not exclusively offered to first-time buyers, the Shared Ownership Scheme is another avenue that prospective first-time property purchasers may wish to explore.

Designed for individuals that can’t afford the entire deposit and mortgage payments to purchase a home to meet their needs, this scheme involves buying a percentage share of a property (anywhere between 10-75 per cent of the home’s market value) while paying monthly rent to a landlord to cover the remaining sum.

However, when purchasing a property using this scheme, you will only be able to buy either a new-build home, an existing property via the shared ownership resale scheme, or a home that’s designed specially to meet your particular needs. For example, if you have a long-term disability.

As long as you’re a first-time buyer with a household income of £80,000 a year or less (£90,000 or less in London) and you can’t afford the entire deposit and mortgage payments for a home that meets your needs, you should be eligible to apply for this scheme.

If you’re keen to learn more about any of the various mortgage schemes for first-time buyers, it’s always best to consult a professional mortgage advisor that can explain the pros and cons of each scheme.

First-time buyer mortgage scheme support at UKMC

Struggling to choose the right first-time buyer mortgage scheme to meet your requirements?

Securing a mortgage deal that you’re happy with is one of the most important aspects of buying your first home as you’ll be tied into this deal for years.

Here at UKMC, we can help you to explore all your mortgage options as a first-time buyer in the UK.

Regardless of whether you want to use a government scheme or a gifted deposit to get a foot on the property ladder, our expert mortgage advisors can assess your eligibility and choices.

To ensure you understand every stage of the entire property-purchasing process, we’re also committed to cutting out the legal jargon. Instead, our honest and authentic approach will make sure you understand all the ins and outs of your chosen mortgage deal.

To find out more about our Warrington-based, family-run business or our specific mortgage advisor services for first-time buyers, please don’t hesitate to get in touch today.

Alongside using our convenient online contact form to reach out, you can also arrange an appointment with one of our experienced mortgage advisors by calling 01925 573328 or by booking your own appointment directly here.

UK Mortgage Centre is a trading style of Refresh Mortgage Network Limited. Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. FRN – 826982. Registered in England & Wales: 11614569. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages. The Financial Conduct Authority does not regulate will writing and taxation and trust advice.