The government is always aiming to generate more first-time buyers. As a result, they’ve developed a number of schemes to help first-time buyers get on to the property ladder.
Government mortgage schemes allow borrowers an easier route to getting on to the UK housing ladder by offering affordable rates with very low deposits. Government schemes also support lenders allowing them to accept mortgages with lower deposits than usual.
Should I use a government mortgage scheme?
There are different Help to Buy schemes such as the original scheme which allows the government to lend money to the borrower. There’s also the Key Worker scheme which was developed in order to help service workers in both purchasing their first property and moving home.
Not every first-time buyer will need to use a government mortgage scheme to purchase their first property. This is because each mortgage scheme and mortgage product will have some advantages and disadvantages. The key is to find which mortgage is suitable for you based on your individual circumstances.
Government mortgage schemes are promoted now more than ever. One of the main reasons for the recent ban on letting agent fees was so that the private rental market would be able to save more money. Savings can then be used as a deposit to buy a home.
The government is encouraging tenants to save more money with the aim of generating more homeowners. The coming years will perhaps see an increase in government mortgage schemes entering the market.
Right to buy mortgages
The Right to Buy scheme allows tenants to purchase the council property they’re living in. There are certain terms and conditions involved, however tenants may be able to get a discount when purchasing their council home.
Help to Buy: ISA
A Help to Buy ISA is a great way to save money for your first home. First-time buyers can benefit from saving money into the scheme and then receiving a 25% savings boost from the government.
Help to Buy: shared ownership
This scheme allows first-time buyers to purchase a share of a property if they can’t quite afford to purchase 100%. Help to Buy: shared ownership would mean the homeowner would pay their mortgage as well as rent to their housing association.
Help to Buy: equity loan
A Help to Buy equity loan can be used for new build properties with just a 5% deposit. The government lends you up to 20% of the cost of your new build home. The remaining 75% is mortgaged to make up the balance.