Good News for First Time Buyers

We’re all familiar with the struggles faced by First-time buyers.  Lenders expect purchasers to have sizeable deposits, and property prices are still out of reach for many, but good news is on its way.  The Government are soon to be lending a helping hand in the form of a new FirstBuy Scheme.

£180m has been earmarked for the FirstBuy scheme which will enable around 10,500 first time buyers to purchase their very own new build property.

So how does it work? 

Essentially, FirstBuy is a new 5-year interest free equity loan scheme.  The loan (jointly provided by the Government and developers) could be as much as 20% of the purchase price.  Purchasers themselves will be required to raise a minimum 5% deposit. The remainder of the balance of the property price can then be funded by a mortgage.

Below is an example of how the scheme could work for an eligible property priced at £160,000:

Property Price – £160,000

Purchasers minimum 5% deposit – £8,000

Interest free 5 yr FirstBuy loan at max 20% – £32,000

Mortgage required – £120,000

This scheme will go a long way to making mortgage thresholds more achievable.  Without the FirstBuy loan the example above would require the purchaser to either obtain a deposit of £40,000 or secure a mortgage for £152,000 – both of which would be a struggle for the average first time buyer!

To qualify for the scheme, purchasers need to have a household income of £60,000 or less and priority will be given to key groups including social tenants and serving armed forces personnel. 

The scheme will assist first time buyers who could not otherwise afford to purchase a property on the open market and is sure to provide a light at the end of the tunnel for many who dream of owning their own home.  Visit propertywide or call 01908 854 436 for more information.

2 thoughts on “Good News for First Time Buyers

  1. This is a really interesting article and is really beneficial for someone such as myself. The only problem I have is that some key groups with have more of a priority? This seems a little unfair as everyone is struggleling to come up with a deposit. What were the reasons for the preferences?

    Kim

    • The government have identified those in social housing and serving armed forces personell as priority groups but that doesn’t mean that other first time buyers will miss out. The budget committed by the government to this scheme is significantly higher than it has been for previous help to buy schemes so there should be enough to go round. That said it is better to register sooner rather than later. Good luck.

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