Making the decision to put down roots for the first time is an exciting experience. Nevertheless, purchasing your first home can come with several big considerations beyond colour schemes and fabric swatches.
For first time buyers, there is a wealth of information out there to help you get your ducks in a row. The Government-backed Help to Buy: Equity Loan, as well as the Shared Ownership scheme are just two ways to make purchasing your first home more straightforward.
Help to Buy: Equity Loan
The Help to Buy: Equity Loan is a government-backed scheme which aims to help first time buyers get onto the rungs of the property ladder.
This scheme provides eligible buyers with a loan of up to 20% of the value of a new build home, provided by the Government. The buyer then only needs to raise a 5% deposit, with a 75% mortgage making up the rest.
Who can use Help to Buy?
The general eligibility criteria is as follows:
- At least 18 years old.
- A first-time buyer, meaning that you have never owned another property either in the UK or abroad. If you are purchasing a property with another person, you must both meet the definition of a first-time buyer to benefit from the scheme.
- At least a 5% deposit of the full purchase price of the property.
- While there are no minimum or maximum income brackets, you must be able to fund at least 80% (60% in London) of the purchase through a combination of deposit and mortgage.
Conditions for using Help to Buy
The scheme is only available to those looking to purchase a new build property. Additionally, the scheme only applies to developments where the housebuilder has a registration agreement with Homes England. Both houses and apartments are available through the scheme, but the value of the property must fall under a particular amount, depending on the region you are looking to purchase in. You can find out more about the regional price caps on the Help to Buy website.
Is Help to Buy right for me?
As of May 2021, over 313,000 households have purchased their first home with the help of the scheme. Buyers are attracted to the ability to own 100% of their property, with a small deposit and a five-year interest period on the equity loan.
However, it is also worth considering what you are really looking for in a home; if you’re not keen on new build properties and your dream home is over the regional price cap then Help to Buy may not be the best choice for you. Fewer mortgage providers offer competitive deals for applicants choosing to take advantage of the scheme, with the loan becoming more expensive when the interest-free period expires.
Many new homeowners have reaped the benefits of the scheme since its initial launch in 2013, but it’s important to think about what you want your own homebuying journey to look like before choosing to use Help to Buy.
What is Shared Ownership?
Shared Ownership allows you to buy a share of a home from a landlord – usually the local council or a housing association – and rent the remaining share. You will need a mortgage to pay for your share – which can be between 10% and 75% of the home’s full value. You then pay a reduced rent on the rented share. You can choose to buy a bigger share in the property in increments as small as 1%, meaning that you can increase your share in the property until you own it outright.
From April 2021, changes to the scheme were introduced under the government’s new Affordable Homes Programme which include:
- You must be a first-time buyer with an annual household income less than £80,000.
- Landlords will pay the costs of repairs and maintenance for the first 10 years of ownership.
- The rules on selling the property have changed. You can find out more about this on the Share to Buy website.
Which scheme is better for me?
Ultimately, choosing the right scheme for you comes down to your own circumstances and personal preferences.
Shared Ownership is cheaper at the outset as the deposit you need to put down is only on the proportion of the property that you are buying. So it’s a great choice for those with low to medium incomes with a smaller deposit, especially as you can increase your share over time as your circumstances change.
Another key benefit of Shared Ownership is that it allows you to buy a home in an area you love without having to move out of town. You can find your dream home without having to spend a long time saving up for a huge deposit.
On the other hand, if you prefer to own all of your home from the start and your income is sufficient to repay a mortgage for the entire worth of the home, then the Help to Buy: Equity Scheme might be a better route.
Each case is different. What matters most is that you choose the scheme that is most affordable for you and won’t make you overstretch yourself financially – now, and in the future.
Purchasing your first home at Glenvale Park
Glenvale Park is an exciting new neighbourhood coming soon to Wellingborough. With facilities to suit a range of lifestyles – including schools and community centres as well as dining and shopping outlets – this is the ideal place for first time buyers, growing families and downsizers alike.
Committed to giving back to the local area while building Glenvale Park, our social value pledge ensures that those who purchase a home on our development will be living within a community that benefits the local economy and environment.
Our upcoming community will offer a range of high-quality homes ideal for those looking to put down roots in a welcoming, sustainable and modern location. A number of these will be available to purchase using either Help to Buy or Shared Ownership, simplifying the purchasing process for first time buyers.
