There are various government initiatives designed to assist homebuyers in the UK. In this blog, we’ll take a closer look at some of the available options.
Help to Buy scheme
The Help to Buy: Equity Loan scheme is now only available in Wales. The buyer provides a 5% deposit and the scheme offers an Equity Mortgage for up to 20% of the purchase price. The buyer takes out a repayment mortgage for the remaining sum.
Shared Ownership mortgages are also available.
First Homes scheme
This initiative is designed to help first-time buyers purchase a home for 30% to 50% below its market value.
The property can be either a new developer-built home or a new home that’s bought through an estate agent, which has previously been bought through the scheme.
This scheme is only available in England.
Right to Buy scheme
Available in England and Northern Ireland only, council house tenants can purchase their home at a discount.
The maximum discount has just been reduced in England and varies by region.
Mortgage guarantee scheme
The mortgage guarantee scheme gives lenders the option to buy a guarantee on mortgages if first-time buyers only have a 5% deposit.
Available until 30th June 2025, mortgage lenders are compensated if buyers are unable to keep up repayments and the property is repossessed. Applicable to 80% of the home’s purchase price, it is designed to protect lenders from any potential net losses of up to 95%.
Shared Ownership schemes
Shared Ownership offers qualifying buyers the opportunity to purchase a share of their intended home from the landlord – often the council or a housing association – and rent the remaining share.
The buyer needs a mortgage to pay for their share, which can be anything between one to three-quarters of the property’s value.
The remaining rent, on the share not owned, is reduced. And at a later stage, the buyer can opt to purchase a larger share in the home, increasing their share to 100%, if and when they are ready.
Eligibility criteria
As you would expect, each scheme has its own eligibility requirements, with its own criteria and rules. As a general rule, schemes will require the property to be your main residence. The following gives you an idea of which, if any, schemes could apply to you.
Help to Buy. You must:
- be buying an eligible home in Wales, costing £300,000 or less from a builder registered with the scheme
- be able to fund at least 80% through both a repayment and a minimum deposit of 5%
- obtain a first charge repayment mortgage with a qualifying lender
First Homes. You must be:
- 18 plus
- a first-time buyer
- able to obtain a mortgage for at least half the cost of the home
- earning £80,000 or less annually before tax (£90,000 if the property you intend to buy is in London)
Right to Buy. You must:
- have had a public sector landlord for a minimum of three years
- not have any large debts, been declared bankrupt or have been threatened with eviction
Mortgage guarantee. You must:
- be an individual, not an incorporated company
- be looking at a property that is UK-based and worth £600,000 or less. You’ll need a deposit between 5% to 9%
Shared Ownership.
Councils may have their own eligibility criteria. For instance, some may prioritise:
- key workers
- those already living in the area
- those with lower incomes
- There are local exemptions for armed forces and their families
