Tuesday May 7, 2024

For prospective first-time homebuyers, navigating the complex landscape of purchasing property can be daunting. To assist individuals in overcoming various financial challenges associated with buying a home, the Government and developers offer a range of schemes tailored to specific needs and circumstances. Let’s delve into the key initiatives available in 2024 and how they can facilitate your journey into homeownership.


  1. Mortgage Guarantee Scheme

Issue: “I can’t save a big deposit while paying rent.”
The escalating costs of housing present a significant hurdle for aspiring homeowners. With the average first-time buyer property price reaching £244,100—an increase of £2,800 from the previous year—saving for a substantial deposit becomes increasingly challenging, particularly amidst rising living expenses.
How it Works:
The Mortgage Guarantee Scheme facilitates homeownership with a smaller deposit requirement. By encouraging banks and building societies to offer 95% mortgages, the scheme enables buyers to secure a home with only a 5% deposit. Moreover, the government’s backing provides reassurance to lenders, mitigating risk.
Open to both first-time buyers and home-movers nationwide, the scheme requires properties to be under £600,000 and must serve as the buyer’s primary residence. Repayment mortgages are mandatory.
Pros and Cons:
  • Pros: Reduced deposit requirement, extended scheme until June 2025.
  • Cons: Not all lenders participate, potential higher interest rates, risk of negative equity.

  1. First Homes Scheme

Issue: “I can’t afford a home in my local area.”
High property prices in desired locations often deter first-time buyers. The First Homes scheme offers substantial discounts, making homeownership more accessible.
How it Works:
Qualified buyers receive discounts ranging from 30% to 50% on new-build homes or properties sold under the scheme. For instance, a £200,000 property could be purchased for £140,000 with a 30% discount.
Available to local first-time buyers in England with household incomes below specified thresholds, the scheme requires a mortgage covering at least half of the home’s reduced price.
Pros and Cons:
  • Pros: Lower deposit and mortgage requirements, potential for reduced property costs.
  • Cons: Resale restrictions, limited availability information.


  1. Shared Ownership Scheme

Issue: “I don’t earn enough to buy a home.”
Individuals with lower incomes can struggle to save for a deposit or qualify for a mortgage. Shared Ownership offers an alternative path to homeownership.
How it Works:
Shared Ownership allows buyers to purchase a share (starting from 10%) of a property and pay rent on the remaining portion. Over time, owners can increase their stake through ‘staircasing,’ gradually acquiring full ownership.
Available to households earning under specified income limits, including former homeowners unable to afford current market prices.
Pros and Cons:
  • Pros: Lower initial investment, equity building, staircasing flexibility.
  • Cons: Limited availability through specific providers, ongoing maintenance responsibilities.


  1. Lifetime ISA (Individual Savings Account)

Issue: “I can’t save much each month for a deposit.”
High living costs can impede savings for a home deposit. The Lifetime ISA offers a savings boost through government contributions.
How it Works:
Individuals aged 18-39 can save up to £4,000 annually in a Lifetime ISA, receiving a 25% government bonus on contributions. The funds can be used towards a first home purchase or retirement.
Designed for first-time buyers purchasing a property valued at up to £450,000.
Pros and Cons:
  • Pros: Government bonus, potential for accelerated savings.
  • Cons: Withdrawal penalties for non-qualified expenses, annual contribution limits.


  1. Help to Build: Equity Loan

Issue: “I want to self-build but it’s too expensive.”
Self-building offers customization but can be financially prohibitive. The Help to Build: Equity Loan aims to make this option more accessible.
How it Works:
This initiative provides interest-free loans for self-build projects, covering a portion of the costs. Applicants can secure a loan of 5% to 20% (up to 40% in London) of the total project expenses.
Available to first-time buyers or existing homeowners constructing their primary residence.
Pros and Cons:
  • Pros: Facilitates self-build projects with reduced financial burden.
  • Cons: Loan becomes interest-bearing after five years, ongoing interest rate variability.


Exploring Further Schemes

In addition to the highlighted initiatives, various other schemes cater to specific demographics and circumstances.
  • Right to Buy: Offers discounts for council tenants.
  • Right to Shared Ownership: Allows social housing tenants to purchase a share of their home.
  • HOLD (Home Ownership for People with Long-Term Disabilities): Assists those with disabilities in acquiring shared ownership homes.
  • OPSO (Older Persons Shared Ownership): Enables individuals aged 55+ to purchase a share of a property.
  • Armed Forces Help to Buy: Provides interest-free loans to armed forces personnel.
By understanding these schemes and their eligibility criteria, prospective first-time buyers can identify the most suitable path to achieve homeownership despite financial constraints. Each initiative offers unique benefits and considerations, empowering individuals to make informed decisions on their journey towards owning a home in 2024.