New ‘Your First Home’ Scheme Announced for First Time Buyers
The Government has announced plans for a new scheme designed to help first time buyers in England get onto the property ladder.
Called Your First Home, the new scheme is due to be formally announced at the Budget in October. But we expect the scheme to allow eligible first time buyers to purchase a new build home with a deposit from just 2.5%, supported by a 20% government backed equity loan.
The announcement is positive news for first time buyers who often found saving a large enough deposit one of the biggest barriers to buying their first home.
How will the Your First Home scheme work?
Although the full details have not yet been announced, the Government has confirmed some of the key features it expects the scheme to include.
Your First Home is expected to be available to eligible first time buyers purchasing a new build property in England from a developer signed up to the scheme.
Buyers could potentially purchase with:
- A deposit from 2.5%
- A 20% government backed equity loan
- A mortgage for the remaining amount
The equity loan will also have an initial interest free period.
For example, on a qualifying property costing £300,000, a 2.5% deposit would be £7,500. A 20% equity loan would represent £60,000, leaving the remaining purchase price to be funded through the buyer’s mortgage.
The exact mortgage and affordability requirements will become clearer once the full scheme rules are published.
Is Your First Home the same as Help to Buy?
The proposed scheme has similarities to the previous Help to Buy Equity Loan scheme, which helped first time buyers purchase new build properties using a deposit, mortgage and government equity loan.
However, Your First Home will be a new scheme with its own eligibility criteria and rules.
One notable difference already announced is the potential minimum deposit of 2.5%. Under the previous Help to Buy Equity Loan scheme, buyers generally needed a deposit of at least 5%.
The new scheme will also have a household income cap and local property price caps, although the Government has not yet announced what these will be.
Who will be eligible for Your First Home?
At this stage, we know the scheme is intended for:
- First time buyers
- Buying a home in England
- Purchasing an eligible new build property
- Buying from a developer participating in the scheme
There will also be limits based on household income and the value of the property.
However, there is still quite a lot we do not know.
The Government has yet to publish the detailed eligibility criteria, local property price limits or full application process. We are also waiting for more information about participating mortgage lenders and how mortgages for the scheme will be arranged.
Can I apply for Your First Home now?
The scheme has been announced but has not yet launched.
Further details, including the implementation timetable, are expected to be announced at the Budget in October.
Until then, first time buyers should be cautious about assuming they will qualify or basing a property purchase on the proposed scheme.
Positive news for first time buyers
Buying your first home can be difficult and for many prospective buyers the challenge is not necessarily being able to afford the monthly mortgage payment. It can be finding the money needed for the deposit in the first place.
A scheme that reduces that initial deposit requirement could therefore make a significant difference to some first time buyers.
At Your Mortgage Expert, we’ll be keeping a close eye on the Your First Home scheme as further information is released.
If you’re hoping to buy your first home, you do not necessarily need to wait for the new scheme before looking at your options. A mortgage adviser can help you understand how much you may be able to borrow, the deposit you might need and the first time buyer mortgage options currently available to you.
If you’re hoping to buy your first home and would like to understand your current mortgage options, our team at Your Mortgage Expert would be happy to help.
We can talk through how much you may be able to borrow, the deposit you may need and the mortgage options that could be available based on your individual circumstances.
You can contact our team by calling 01722 744546, emailing mortgages@your-mortgage-expert.co.uk or completing the contact form on our website.
Your Mortgage Expert is based in Salisbury and provides mortgage advice to clients locally and across the UK by telephone and video.