The ‘First Home’ Scheme – a new government initiative to help first-time buyers and Keyworkers
You have probably heard of the Government's new initiative, aimed at providing first-time buyers and Keyworkers with a 30% discount on homes but what is the First Home Scheme?
- How does the First Home Scheme Work?
- How do you qualify for the First Home Scheme?
- Where can you buy one?
- And how do you apply for the scheme?
Here is a guide to the first home scheme as well as answers to some common questions about it.
What is the first home scheme?
The 'First Home' Scheme has been designed to help first-time buyers and Keyworkers to buy a home in their local area. The scheme offers first-time buyers and Keyworkers purchase a qualifying new build home at a discounted rate of 30% compared to market price.
In some areas the discount could be as high as 50%, providing even greater savings. This could save each buyer an average of £70,000, making deposits and mortgages more affordable.
The discount will apply to the home forever, meaning that when you come to sell your home it will be sold at the same discounted against the market rate at the time of the sale.
How does the First Home Scheme Work?
Once the First Home Scheme is fully up and running, developers will offer a limited number of plots in most new housing developments under the scheme. If the builder is participating in the First Home Scheme, then you must still meet the eligibility criteria and apply through the builder.
How do you qualify for the First Home Scheme?
The scheme has been designed to help local first-time buyers and Keyworkers purchase their first home in their local area. The criteria for the scheme is:
- Purchasers of First Homes must be first-time buyers and must have a household income not exceeding £80,000 and £90,000 in London (or lower if set by the local authority)
- Post-discount price caps on first sale of the property of £250,000 across England and £420,000 in London (or lower if set by the local authority)
- A First Home should be the buyers only home and a purchaser will need to use a mortgage or home purchase plan for at least 50% of the purchase price of the home.
- Local connections and/or Keyworker status as determined by the relevant local authority.
Where can you buy one?
The First Home Scheme is available in England. The scheme has been on trial in Bolsover in the midlands and is expected to roll out to the rest of England in the second half 2021.
How do you apply for the scheme?
There is no application deadline however as with all schemes aimed at helping first-time buyers and Keyworkers it is likely that the number of plots available will be limited in each development and as such will sell quickly.
Once you know your developer is participating in the scheme you will need to apply to have your eligibility confirmed when you are ready to reserve a plot under the First Home Scheme.
How do I get myself in the best position for the First Home Scheme?
As plots are likely to be limited you should make sure you are mortgage ready before approaching the builder. Speak to one of our expert advisers to help make sure you are in the strongest position so that you can make your offer in confidence knowing you have your mortgage in principle behind you.
What deposit am going to need to for the First Home Scheme?
Mortgage lenders will require you to pay a deposit even if you receive a discount through the First Home Scheme. As a first-time buyer you may also be eligible for the 95% mortgage scheme.
This means you may be able to purchase a home under the first home scheme with a 5% deposit. For a home bought under the first home scheme for £250,000 a 5% would be just £12,500 with a mortgage of £237,500.
What other schemes are there for first-time buyers?
Due to the rising cost of home ownership, in particular for first-time buyers and keyworkers the government have developed a number of schemes over the years as well as the the recent introduction of the First Home Scheme -
- Help to Buy - offers first-time buyers the opportunity to purchase a new build home with an equity loan from the government.
- Shared Ownership – Offers the opportunity to purchase a share in a home and pay rent on the balance.
- Stamp Duty Tax Relief – Introduced to help the economy during the global pandemic, the Stamp Duty Holiday is being phased out by October 2021.
- The Mortgage Guarantee Scheme – Introduced in spring 2021, The Mortgage Guarantee Scheme is designed to help increase the supply of 95% mortgages available from lenders.
Get in touch
You don’t need to make this life changing decision on your own. We’re here to support you through the whole process, discuss your options. It makes sense to talk to a qualified mortgage broker. We can find the mortgage product that suits your circumstances best.
You can book an appointment or request for one of expert team to give you a call back.
Your home may be repossessed if you do not keep up repayments on your mortgage