First Homes Scheme Mortgage
First Homes scheme is looking to make buying your first property possible, by offering a way for first time buyers to stay local and make that first step onto the property ladder aided by a significant discount on new build properties.. Call us on 03300 432428 to talk with our First home scheme mortgage brokers.
The First Homes Scheme is a government-backed initiative aimed at supporting first-time buyers and key workers by offering brand new homes at a discount of at least 30% below market value.
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First Home Scheme Mortgage
The Government’s First homes scheme is intended to help first time buyers buy their first place and get on the property ladder.
The scheme has been launched as part of a new government strategy. You can see all the details behind the First Home scheme here.
First Homes is a new scheme designed to help local first time buyers and key workers onto the property ladder, by offering homes at a discount of 30% compared to the market price. This could save each buyer an average of £70,000, making deposits and mortgages more affordable.
In certain areas the discount could be as high as 50%, providing even greater savings. This is depending on certain local authorities
The discounts will apply to the homes forever, meaning that generations of new buyers and the local community will continue to benefit every time the property is sold.
What is First Homes?
First Homes are residential apartments and houses designed in development up and down the country with a discounted rate of a minimum 30%.
Local councils may be given discounts to make the scheme more affordable for local people.
The move has also secured the first priority for workers and home buyers on offer which could be exciting for people who had previously dismissed the chance of getting a property.
The money from the discounts will be transferred as they go on for buyers of future properties so those who buy them can help them ascend. There are also discounts available to people living in the local area where they would like to stay.
Local first time buyers and key workers (Teachers, NHS Staff, Police staff). A purchaser (or, if it is a joint purchase, all the purchasers)of a First Home should be a first-time buyer.
Local eligibility criteria also has a maximum income cap. This requires purchasers of First Homes, whether individuals, couples or group purchasers, should have a combined annual household income not exceeding £80,000 (or £90,000 in Greater London) in the tax year immediately preceding the year of purchase.
A purchaser using the First Home scheme should have a mortgage or home purchase plan (if required to comply with Islamic law) to fund a minimum of 50% of the discounted market value purchase price.
These national standard criteria should also apply at all future sales of a First Home. If you are a key worker make sure you are 100% eligible with your local authority.
What Deposit would First Time Buyers Need ?
A 30% discount with the first homes scheme could make homeownership possible for many first-time buyers and key workers, though it’s important to bear in mind that a mortgage will need to be obtained to finance the purchase.
Most first-time buyer mortgages require a minimum of 5% deposit. If a First Home programme home was sold to an eligible applicant for £250,000, a 5% deposit would equate to £12,500.
This government scheme would help future first time buyers considerably as it allows them to put down a lower deposit instead of using the full price percentage, you use the price after the discount has been applied.
First Homes is one of a number of government initiatives designed to help first-time buyers onto the property ladder, while there are other options that may be worth considering too.
1. Help to Buy mortgages
Save enough for a 5% deposit and with a Help to Buy equity loan mortgage the government will let you borrow 20% more so that you can get a mortgage at 75% LTV. In London, the loan can be for up to 40%, but regardless of where you buy, no interest is payable on the loan for five years.
PLEASE NOTE: Help to buy has ended on the 31/10/2022
» COMPARE: Help To Buy Equity Loan Mortgages
2. Right to Buy mortgages
If you rent from a housing association or the council, and wish to swap paying rent for a mortgage, you may be able to purchase your current property at a discounted price using a Right to Buy mortgage. You must have lived in and paid rent on the home for at least three years to qualify.
» COMPARE: Right To Buy Mortgages
3. Shared Ownership mortgages
By allowing you to buy a stake in a home, rather than all of it, a Shared Ownership mortgage can help if you’re struggling to afford to buy outright. You’ll have the option to increase the share that you own in the future, and could one day own it all, but rent must be paid on any part that isn’t yours.
» COMPARE: Shared Ownership Mortgages
Pros and Cons of the First Homes scheme
The First Homes scheme will be suitable for some aspiring homeowners and not for others. Here are the advantages and disadvantages of First Homes that should be considered before applying.
Under the scheme, selected plots of selected properties within new housing developments are designated specifically for the First Homes discount. These homes are not only newly built to high standards but are also intended to remain affordable for future buyers, with the discount locked into the property for every resale.
Before you can exchange contracts, you’ll need to have your eligibility criteria verified and secure a mortgage covering at least 50% of the property’s maximum price after the discount. Buyers are also required to complete all necessary legal documents during the conveyancing process, just as with any standard property purchase.
Pros of First Homes
- Could help you onto the property ladder in your local area where you have previously been priced out.
- You get a new home at a minimum 30% discount but own it in its entirety.
- Stamp Duty is based on the discounted price
Cons Of First Homes
- You will need to find a developer taking part in the First Homes scheme in your area. Competition for First Homes will be fierce.
- The discount attached to First Homes and the price cap could limit your profit potential.
- You must try to sell to someone else using the First Homes scheme.
- The scheme is only available in England.
FAQs - First Homes Scheme
Are there other costs For First Time Buyers to consider?
Buying a home, whether through the first homes scheme or not, can be a big decision and as with any other property purchase, there may be other costs to factor in. These might include:
Solicitor’s fees
Removal costs
Valuation fees
Surveyor’s fees – Find out what type of house survey you need
Insurance
Our mortgage brokers will going through the total costs involved so you will be aware of the total costs involved.
Is mortgage protection a good idea?
To answer whether life insurance or mortgage protection is worth it or not you have to ask yourself another question; Could you afford to maintain your current lifestyle if you or your partner were suddenly gone? In most cases, the answer will be no. So is Life Insurance worth it? Yes! Your expert broker will find the right deal for you.
What other local eligibility criteria is there?
Local authorities may apply additional requirements, prioritising key workers or those with strong ties to the area.
Before applying, it’s crucial to understand the eligibility criteria in your local area. These rules are set to ensure the homes go to those who need them most and help maintain community roots.
Finally: The Process
The Process: From Application to Exchange
Once you’ve found a home on one of the selected plots, the process begins with checking your eligibility. After approval, you’ll secure your mortgage and prepare to exchange contracts. At this stage, your solicitor will handle the legal documents, ensuring everything complies with the scheme’s requirements and that your discount is registered correctly.
It’s vital to act quickly, as demand for these homes is high and selected properties are limited within each development.
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