Tuesday, May 21, 2024

First Time Buyer Government Scheme

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Right To Buy/right To Acquire

New govt loan scheme ‘really exciting news for first-time home buyers’

Individuals eligible for this scheme are mainly the Tenants who have rented their homes from their respective local councils. All the council tenants can buy the council homes at a discount.

There are certain criteria that the council tenants need to fulfill in order to buy a council home.

Required Criteria

The first time buyers can apply for the Right to Buy scheme to buy the council homes if the below-mentioned criteria match with the requirements :

  • The council home needs to be his/her primary residing house.
  • The Property needs to be self-contained.
  • Applicants need to remain in the public sector for more than 3 years.

Joint Applicant

The first time buyers can even apply for this scheme as a joint applicant. In order to be a joint applicant, the applicant needs to fulfill 2 basic characteristics:

  • He needs to have a tenancy.
  • It will be checked if the person has stayed with 3 family members for the past 12 months.

Ex-Council Homes

The ex-council homes fall under the Right to Buy scheme. The homes that previously were owned by a council, but they have sold that property to the landlord while the person was living in it, may have the access to apply for the Right to Buy scheme.

Another Ways to Buy A Home

If nobody is residing inside the home when it was sold by the Council, then also the buyers are applicable to buy that property with the help of the Voluntary Right to buy a Pilot scheme.


How can You Apply for the Right To Buy Scheme?



How Can I Buy A Home Under The Scheme

There isn’t a dedicated website or portal where you can apply for a First Home, so you’ll need to do your own research locally to find out which developers are taking part.

Once you find a development offeringdiscounted homes under the scheme, you can reserve one by applying directly to the developer.

Why Buy A Help To Buy Home

Help to Buy makes getting on to the housing ladder more accessible to some buyers by reducing the amount required for a deposit when compared to buying a property on the open market. Another benefit of the equity loan from the government is that with a larger amount to put down, the buyer will often be able to get a better mortgage rate from the lender.

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Is The Scheme A Good Idea For First

The new scheme is sure to be tempting for cash-strapped first-time buyers struggling to get on the property ladder, but it might not be right for everyone.

First of all, the speed of the roll-out means buyers could face a battle to secure a property. Around 300,000 people bought their first home in 2020 – a figure that dwarfs the 10,000 new homes likely to be available each year under the scheme.

Tim Bannister of Rightmove says: ‘There’s likely to be a scramble for properties under this scheme as they become available, especially as we’ve already seen an influx of first-time buyers enter the market recently.

Based on current available stock levels it’s unlikely there will be enough of these properties to satisfy the high levels of demand’.

In addition, buyers using the scheme may struggle to progress to buying a home outside of it in the future. The discount might enable you to buy a home now, but losing 30% of the property’s value when you sell may leave you struggling to progress up the ladder.

Lifetime Individual Savings Account

Extend first time buyers

You can use a LISA to buy your first home or save for later life. You must be aged between 18 and 39 to open a LISA.

You can put in up to £4,000 each year, until youre 50. You must make your first payment into your ISA before youre 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 a year.

If youre buying with another first-time buyer who also has a LISA, you can both use your LISA towards the same property.

Be aware that theres a penalty for taking money out of a LISA if youre not putting it towards a deposit or withdrawing after age 60.

Find out more in our guide Lifetime ISAs

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Letting For Longer Than 2 Years

You may be able to let out your First Home for longer than 2 years if:

  • the location of your job changes
  • a marriage or long-term relationship ends
  • youre moving to get away from a situation that involves domestic abuse
  • youve been made redundant
  • youre caring for a relative or friend

You can ask the local council. You may also need to ask your mortgage lender.

How Many First Homes Will Be Available

The first properties to be sold under the scheme launched today in Bolsover in the East Midlands, but it may be some time before the scheme really gets into gear.

The government says further sites will be launched in the next few weeks. It anticipates 1,500 First Homes becoming available by the end of 2021, and at least 10,000 a year thereafter.

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Restrictions On The Mortgage Providers

The buyers FTBI mortgage must be from a qualifying lending institution. These include lenders who areauthorised under the Financial Services and Markets Act 2000, and who have permission to enter into regulated mortgage contracts. This is likely to include most banks and building societies. The Financial Services Authority keeps a register of authorised persons. The register can be found on Financial Conduct Authoritys website..

The buyers solicitor/conveyancer will check that the lender is compliant before a sale can proceed.

Qualifying Criteria For All Applicants

Help to buy scheme explained for first time buyers

You must:

  • be a qualifying firsttime buyer unable to afford a new home. Applicants must not be able tobuy a home suitable for their housing needs within a reasonable travelling distance of their work place,without assistance
  • be able to demonstrate access to savings or sufficient funds to pay a deposit , legal fees, stamp duty and other costs of moving
  • be able to sustain home ownership in the long term. Typically, applicants will be employed on apermanent contract of employment . If selfemployed, the applicantmust be able to provide accounts for the last three years.
  • have a good credit history
  • take out a first mortgage with a qualifying lender

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Taking Out Another Loan Or Increasing Your Mortgage After Purchasing A Ftbi Home

You cannot do this without permission from the National HomeBuy Agent. Further advances must be approved by the National HomeBuy Agent. Advances to be used for staircasing or repaying the governments contributionwill usually be welcomed. Advances for other purposes will be considered by the National HomeBuy Agenton a casebycase basis.

Buyers can transfer their mortgage to another lender, which must be a qualifying lending institution with permission from the National HomeBuy Agent. Buyers must ensure their new lenderis informed that it is an FTBI property with a second charge entitling the government to a share of the future sale proceeds.

The National HomeBuy Agent may decline permission for further advances or transfer to another lender ifit considers the buyer may be putting themselves in an unsustainable financial position.

What The Help To Buy Scheme Is

The Help to Buy scheme helps first-time buyers of newly-built homes to buy a new house or apartment. It also applies to once-off self-build homes.

It only applies to properties costing 500,000 or less.

The Help to Buy scheme gives a refund of income tax and Deposit Interest Retention Tax paid in Ireland over the previous 4 tax years.

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Exemptions For Armed Forces And Their Families

Youre exempt from council conditions about being an essential worker or living in the area if youre:

  • a member of the armed forces
  • the divorced or separated spouse or civil partner of a member of the armed forces
  • a widow or widower of a deceased member of the armed forces
  • a veteran who left the armed forces in the last 5 years

You still need to meet other eligibility conditions.

What Is Help To Buy


The main aim of Help to Buy is to improve the access to and affordability of mortgages for newly built flats and houses, specifically for First Time Buyers who cannot afford a large deposit.The current Help to Buy scheme runs in England to March 2023. There are other similar schemes available in Scotland, Wales and Northern Ireland.

The scheme means the government will lend you up to 20% of the full purchase price of a new-build home. This is called an equity loan.

You must buy your home from a homebuilder registered for Help to Buy: Equity Loan.

The amount you pay for a home depends on where in England you buy it and regional equity loan price caps are in place for this scheme ranging from £186,100 to £600,000.

The government will lend you up to 20% of the value of your new property through an equity loan, which will be interest-free for the first five years and can be repaid at any time or on the sale of your home.

You can buy a property for up to £600,000 with Help to Buy. Regional equity loan price caps are in place ranging from £186,100 to £600,000.

There is no household annual income limit, but you must not own a home now or in the past in the UK or abroad and not had any form of sharia mortgage finance customers need to secure up to a 75% mortgage.

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Who Provides The Contribution For Ftbi

This is provided by the Homes and Communities Agency and deliveredthrough Local HomeBuy Agents as part of the governments HomeBuy programme. The governments contribution is always provided to the firsttime buyer but paid to the housebuilder on the designated FTBI development.

Once a buyer has had their eligibility approved the Local HomeBuy Agent will set the Prescribed MortgageLevel. This is the level of mortgage that a buyer should be seeking from their lender.

First Time Buyers What Schemes Are Available

When you are considering purchasing your first home, getting the right information and accurate advice is critical at this time.

The first step to getting your foot on the property ladder is knowing your numbers and being aware of the schemes that are available to you and your individual financial circumstances.

These are the following schemes which you may want to take into account as a first time buyer:

  • Help to Buy ISA Although this scheme closed in November 2019, if you had already opened a Help to Buy ISA before this period, you can continue to save until November 2029. The Government will boost your savings by 25%. Meaning, for every £200 you save, receive a government bonus of £50. The government bonus you can receive is £3,000. You are therefore also eligible to save up for your deposit using this method, tax free.
  • Help to Buy Equity Scheme With this scheme, the government can provide a loan of up to 20%, interest-free in the first five years if you are a first time buyer.
  • This scheme allows first time buyers an opportunity to purchase a share in a new build property or a resales property and pay rent on the remainder of the share.

To help make your first time property purchase as stress-free as possible, get in touch with Tayside Mortgages today. We aim to provide you with a service that gives you total peace of mind.

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How Long The Process Takes

The Local HomeBuy Agent will seek to assess an applicants eligibility within eight working days. After receivingconfirmation of eligibility it is up to the buyer how soon they can find a property and submit a PropertyInformation Form to the Local HomeBuy Agent.

The Local HomeBuy Agents Authority to Proceed is valid for three months the time limit for exchange ofcontracts. Typically, most housebuilders will be seeking buyers to exchange contracts within one month ofmaking a reservation.

Buyers are responsible for securing their mortgage and appointing their solicitor/conveyancer, although theLocal HomeBuy Agent and housebuilders will be able to suggest some options.

First Home Super Saver Scheme

First Home Buyers Government Scheme 2020 [95% No LMI Mortgage]

The First Home Super Saver Scheme allows first home buyers to save a deposit for their first home inside their super.

This can help first home buyers save faster with the concessional tax treatment of superannuation.

Tip: Youll need a determination letter from the ATO specifying the amount that can be released from your super to use as a deposit for a home loan.

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Who Is Eligible For The Help To Buy Equity Loan

The general eligibility criteria for Help to Buy is as follows:

  • You must be at least 18 years old.
  • You must be 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.
  • You will require 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% of the purchase through a combination of deposit and mortgage.
  • The value of the property youre purchasing cant be over the regional price cap for your area full list of price caps below.
  • You must be able to prove you can afford the mortgage repayments and other outgoings on the home you wish to buy. There is a standard Homes and Communities affordability calculator which will determine whether the property is sustainable long term.
  • Part Exchange is not available through the scheme.
  • You cannot sub-let your Help to Buy home.

Other Government Resources For First

First-time home buyers often find it helpful to take a homebuyer education course before buying. And, if you use a government-run mortgage or down payment assistance program, homebuyer education is often required.

Many courses can be found online or through government housing agencies like Freddie Mac and Fannie Mae. Some are free, while others are available for a fee that typically ranges from $75 to $100, Gravelle says.

Even if you are not required to take this class, its worth your time and expense.

Homeownership is an important responsibility, and having a better understanding will ensure greater success, Anderson says.

You may even qualify for counseling through HUD for free.

There are HUD-approved housing counseling agencies in every state that can help borrowers navigate the process for no charge, adds Anderson.

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How To Buy An Ftbi Home

The buying process has 5 stages.

Stage 1: Register your interest

  • Prospective buyer/applicant registers their interest with the Local HomeBuy Agent, either direct or viathe housebuilder.
  • Buyer completes a HomeBuy Application either online or on a paper copy.
  • Buyer contacts an Independent Financial Advisor to gain confirmation of financial status. Some Local HomeBuy Agents may also require buyers to attend a financial interview before giving eligibility approval.
  • Buyer must ensure they have funds to pay:
    • a reservation fee
    • 5% exchange deposit .
    • other fees on completion .

    Stage 2: Eligibility approval

    If eligible, the buyer will receive an Approval of Eligibility Letter from the Local HomeBuy Agent withineight working days of application. They will also receive details of the level of mortgage the buyer shouldbe seeking .

    The Local HomeBuy Agent will also provide details of the applicable FTBI schemes in their area.

    Stage 3: Pay reservation fee

    If they have not already done so, the buyer makes appointments with sales teams at FTBI developmentschemes.

    The buyer completes a Property Information Form, returns it to the Local HomeBuy Agent together withdetails of their solicitor/conveyancer and a copy of the housebuilders completed reservation form.The buyer will also pay a reservation fee, usually £500, to the housebuilder.

    The buyer should instruct a solicitor to act for them and tell their Financial Advisor so that a full mortgageapplication can be submitted.

    How Do I Apply For These First Home Buyer Government Grants/schemes

    Government launches 30% first

    First off, you want to make sure that youre eligible for the government scheme/grant youre applying for. Each program has a slightly different eligibility requirement so you want to check off all the boxes prior to submitting your application.

    Generally, you can apply for these government schemes and grants at the same time you apply for a home loan.

    However, if youre planning on utilising any of the aforementioned grants or schemes, please have a discussion with your bank or mortgage broker prior to submitting your application.

    Most lenders will apply for the grant on your behalf once a formal home loan approval is granted, and you have signed any relevant applications/declaration.

    For the stamp duty waiver, your solicitor will handle the paperwork for you on settlement day.

    There can be different eligibility requirements so its best to consult with your mortgage broker or directly with your lender up front.

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    Help To Buy Equity Loan Repayment

    You dont have to pay any interest on your Help to Buy Equity loan for the first five years, and the loan only needs to be repaid when your property is sold, or at the end of your mortgage term – whichever happens first.

    Paying back your Help to Buy equity loan early

    There are a number of reasons you may wish to pay back your Help to Buy equity loan early, the most common being you want to own your property outright. You do have the option to pay back some or all of the loan before the five-year interest-free period runs out . However, there are limitations to this.


    Before the five-year interest free period ends, you dont have the option of chipping away at the loan with monthly payments. You can either clear the whole loan in one go, or you can make a partial repayment, but this must be for a minimum of 10% of the propertys current value. This is known as staircasing. So, if your entire equity loan is the minimum 10% of the property value, then you will have to pay back the full 10% in one go. If your equity loan is 20% of the property value, you have the option of paying it back in two 10% chunks, or one 20% payment.

    Independent Property Valuation

    To work out exactly how much youll need to repay, youll first need to have the property independently valued by a surveyor. You can find a surveyor near you using the RICS website. Be aware that you will have to pay for this valuation , and its only valid for three months.


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