Seymours

A whistle-stop tour of First-Time Buyer Schemes

Buying a property can be a bit of a minefield for a first-time buyer and there are a number of routes available. To make this easier, we have compared a few of the most popular schemes from Help to Buy and Shared Ownership to the Lifetime ISA.

Demand for property online soared line as the property market re-opened in June. Google searches (google trends) for ‘first-time buyers’ increased by 47% compared to last year as buyers interest reignited after the period of lockdown.  The property portal Rightmove also reported similar surges and, when questioned, 28% of buyers had no previous plans to move showing how lockdown has made many of us considered exactly what we now need from our homes.

Fortunately, there are several routes onto the property ladder, both for first-time buyers and second steppers looking to upsize. Below is a quick summary of what you need to know:

Help to Buy – quick to get onto the property ladder

Buyers will need a 25% deposit, which is made up of 5% of their own funds and 20% coming from a government loan. This means a mortgage only needs to be secured for the remaining 75% of the property’s value. Help to Buy loans are interest-free for the first five years.

Pros

Cons

Shared Ownership is Helpful if You Have a Small Deposit

Shared Ownership gives first-time buyers and those that do not currently own a home the opportunity to purchase a share in a property.

The buyer secures a mortgage on the share they own, usually between 25% and 75% of the total value, and pays rent to a housing association on the remaining share. Because buyers only need a mortgage for the share they are purchasing, deposits are usually a lot lower compared to the amount that would be required when purchasing outright.

You then have the option to purchase more shares in your home at a later stage through a process called ‘staircasing’, until you own 100% of the property.

Pros

Cons

A Lifetime ISA Is Great if You’re Already Saving For a Home

A Lifetime ISA (Individual Savings Account) is a longer-term tax-free savings account that gives you a government bonus of 25% of the money you put it.  You can save up to £4,000 a year with the government adding up to a further to £1,000 .  If you’re already saving for your first property, it makes sense to transfer your funds into this type of account to benefit from the additional bonus.

Pros

Cons

If you are considering buying and would like to find out more about the available schemes or about the properties for sale we have in Surrey, please contact one of our local branches today.