Government schemes for first-time home buyers and existing homeowners
Several government schemes can help you buy a home. These include Help to Buy, Right to Buy and Shared Ownership. Read this article to find out more about them and how to apply.
- Help to Buy
- Right to Buy
- Shared ownership
- Co-Ownership in Northern Ireland
- First Steps London
- Shared equity schemes
- Starter Home scheme
Help to Buy
The Mortgage Guarantee Scheme is now closed to new loans.
Those with a small deposit, could be eligible to use the Help to buy scheme:
Equity Loan scheme – available to first-time buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000.
Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have at least a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price.
The scheme is available until 2021.
Mortgage Guarantee scheme – available for new and old properties across the UK. The government agrees to cover any of your mortgage lender’s losses if you have difficulty repaying it. However, you’re still responsible for keeping up your mortgage repayments in exactly the same way as any other mortgage.
The scheme is open until 31 December 2016.
With Help to Buy, there are limits on the cost of the property you buy. These limits differ across the UK.
Right to Buy/Right to Acquire
Right to Acquire is a scheme offered in England and Wales for housing association tenants who don’t qualify for Right to Buy. The discounts are slightly smaller.
Right to Buy is for tenants in England, Wales and Northern Ireland who rent their home from their local council.
It allows tenants who qualify, to buy their home at a discount.
The size of the discount varies depending on where you live and the type of property you want to buy.
Tenants who were living in a council home before it transferred to another landlord such as a housing association, might be eligible to buy their home under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
Usually, tenants must have rented from the public sector (i.e. local council or housing association) for three years before they can buy under these schemes.
The three years can be non-consecutive. So you could still qualify if you rented from the private sector between times when you rented from the public sector.
The Right to Buy scheme has now been extended to include housing association tenants in England.
This extension started with a few housing associations in certain areas. It was then rolled out across the rest of England over the year.
In Scotland: the Government plans to end the scheme for all council and housing association tenants in Scotland, but there are other schemes available.
In Northern Ireland: this scheme is called the House sales scheme and is for tenants who rent from the Northern Ireland Housing Executive or a housing association.
Shared ownership is where you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remaining share.
You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the home’s full value.
You then pay a reduced rent on the share you don’t own. Later you can choose to buy a bigger share in the property up to 100% of its value.
Eligibility restrictions on the shared ownership have lifted. So, from April 2016 anyone who has a household income of less than £80,000 (outside London) or £90,000 (inside London) can buy a home through shared ownership.
Only military personnel get priority over other groups. The scheme will apply across England.
Co-Ownership in Northern Ireland
This scheme is only for Northern Ireland and is available for both newly built and older homes.
You buy between 50% and 90% of the property (known as the ‘starter share’). You can increase that share at any time (known as ‘staircasing’).
You pay rent on the portion you don’t own.
First Steps London
This scheme aims to help low and modest income earners buy or rent at a price that’s affordable.
You part buy and part rent the property – mostly for newly built homes but some other properties are included.
There are eligibility criteria based on earnings.
You can’t buy a home on the open market.
Shared equity schemes
The Help to Buy equity loan scheme is a government scheme currently set to run until 2020. It’s available to first-time buyers as well as homeowners looking to move – but only for newly built homes.
Scotland has two shared equity schemes – New Supply Shared Equity and Open Market Shared Equity.
The Help to buy scheme offers help by providing an equity loan (30% increasing to 50% of the purchase price).
It’s designed for people who would otherwise need social housing.
You can repay the loan at any time before you sell the property. But if you sell the property, the loan must be repaid at that point.
There’s an Equity Sharing scheme in Northern Ireland where you can buy a property, often at a discount, with a housing association or the Northern Ireland Housing Executive (NIHE).
Starter Home scheme
The Starter Home scheme is a new government plan, where 200,000 new build homes are available to first-time buyers under 40 years old with at least 20% off the market price.
The discounted price for these homes should be priced no more than £250,000 outside London, and £450,000 in London.
- Understand how much you can afford to borrow and what lenders assess.
- Use our Mortgage affordability calculator to estimate what you can borrow.
- Use the Mortgage payments calculator to estimate the monthly interest and repayment amount.