What help can I get if I want to buy a home? Here are 5 schemes worth looking into if you want to get on the property ladder

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With the Help-to-Buy application deadline set for October 31 and house price increases continuing to outpace earnings, many prospective first-time buyers will be looking for alternative ways to help them get onto the property ladder.

There are 5 Government schemes currently available to those looking to buy, including the housing-market reforms that were recently announced as part of a ‘mortgage review’ - such as the new Right-To-Buy scheme, ‘Benefits to Bricks’ reform and more.

They are ...

Shared Ownership

There are schemes available to help you get onto the housing ladderThere are schemes available to help you get onto the housing ladder
There are schemes available to help you get onto the housing ladder

Buying a home through a Shared Ownership mortgage can be a great way to transition on to the property ladder, as it is a cross between buying and renting. Shared Ownership involves buying a percentage of the property you’re planning to live in and renting the remaining percentage from a local housing association or local authority. This can be a great way to move to a more expensive area, where house prices are unachievable, and can also be a more simple and affordable way on to the property ladder.

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While you won’t own all of the equity of the property to start off with, it’s possible to increase your share to 100% over time. It’s worth keeping in mind, however, that not all mortgage providers will offer a Shared Ownership mortgage – be sure to get help from an experienced mortgage advisor so that you’re fully aware of your options and don’t get caught off-guard by any additional fees.

‘Benefits to Bricks’

‘Benefits to Bricks’ refers to the series of reforms recently announced by ex-PM Boris Johnson. The reforms involve changing welfare rules so that those in work, while also claiming housing benefit, can put their benefit towards a mortgage. This means that if someone on Universal Credit can save for a deposit on a property, the Government will give them the same housing support than they would have used for rent, on a mortgage instead.

In order to make this plan a reality, changes will need to be made to Universal Credit, which is reduced for claimant’s who have savings over £6,000, and is cut completely when savings are over £16,000. That being said, the Government has confirmed that Lifetime ISA savings will be exempt from this rule, which could make it a more realistic option in the future for those looking to get on the property ladder.

Right to Buy

Right to Buy has been around for a long time, originally being introduced in 1980, and it enables those living in council houses to buy the property at a discount. Currently the discount can be up to 70%, depending on how long you’ve lived in the house, the type of property and its value, with a maximum discount of £116,200 in London and £87,200 in the rest of England.

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Recently, ex-PM Boris Johnson announced the scheme would be extended to the millions living in housing association properties, who are currently barred from the Right to Buy scheme. If this change takes place and you live in a housing association property, it could make it possible to stay in the house you currently live in and become its owner.

First Homes

First Homes was created to help all first-time buyers, but particularly key workers, and launched in the midst of the COVID-19 pandemic in June 2021. The scheme can provide a discount on a home up to half of its current market value, but it’s worth keeping in mind that the discount is not the same for everyone, instead being at the discretion of your local council. The minimum discount, however, is 30% which can still go a long way towards helping to save the money for a first home.

Another important point to remember is that First Homes only applies to newly built homes. With many major banks and mortgage lenders signed up to the scheme, there are a lot of great deals out there, but we’d advise working with a mortgage broker to get a loan through the scheme.

95% mortgage guarantee scheme

Launched in April 2021, this scheme helps prospective house-buyers, who don’t have a 10% deposit saved up, have new mortgage options. It offers you just a 5% minimum mortgage deposit requirement, incentivising lenders by ‘guaranteeing’ a portion of any mortgage offered with the lower deposit, and therefore reducing the risk involved.

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This scheme can be a great option, but keep in mind that it only applies to properties valued at less than £600,000 and must be a repayment mortgage instead of an interest-only mortgage. Another important disclaimer is that self-employed workers could be excluded, and the loans on offer might not include the best first-time buyer mortgage rates. If you are considering buying a home through this scheme, you only have until the end of the year to use it, as it will only be on offer until December 2022. Talk to a mortgage broker before you head down this route, so that you’re aware of all of the best 5% deposit properties on the market.