More Than Just The Mortgage Guarantee Scheme

The end of September saw Theresa May’s Conservative Government signal the end of the Help-to-Buy Mortgage Guarantee scheme, but panic not!

The end of September saw Theresa May’s Conservative Government signal the end of the Help-to-Buy Mortgage Guarantee scheme, but panic not! First time buyers can still benefit from a number of other great financial schemes, designed to help them take that first (sometimes tricky) step on to the UK property ladder: New Home Finder reports.

So What Signalled The End For The Mortgage Guarantee?

Available since January 2014, the Mortgage Guarantee scheme, which is just one part of the wider Help-to-Buy policy has helped thousands of first time buyers make it on to the property ladder.

However, the Chancellor Philip Hammond said in a letter to Mark Carney (Governor at the Bank of England) that increasing confidence in the mortgage market, has reduced the reliance on the Mortgage Guarantee scheme, hence the decision not to extend it beyond 2016. (1)

Free Money And Other Incentives for First Time Buyers

So with the Mortgage Guarantee scheme soon to be over, what other options are available to help first time buyers get onto the property ladder?

Help-to-Buy Tax Free ISA

Under this Government backed scheme first time buyers can save up to £12,000 in one of these Help-to-Buy ISAs and the government will top it up by 25%!

All you need to kick start your ISA is a £1,000 lump sum and from there you can top it up with monthly deposits of up to £200.

For every £200 you pay in the Government will add on another £50 as long as you’ve saved a minimum of £1,600 of your own money. Better yet, couples saving for their first home together can each open separate Help-to-Buy ISAs and double up on the benefits. (2)

Help-to-Buy Shared Ownership

First time buyers can also take advantage of the Help-to-Buy Shared Ownership scheme but beware, that not all buyers are eligible. To qualify your household must earn less than £80,000 per year.

If that’s you, then the scheme works by offering buyers the opportunity to buy a share of a property between 25% and 75% of the home’s value. You then pay rent on the remaining share. This reduces the mortgage amount required to get on to the property ladder. (3)

Help-to-Buy Equity Loan

To be eligible for the Help-to-Buy Equity Loan, you need to be buying a new build home with a purchase price under £600,000 in England (or £300,000 in Wales) from a registered Help-to-Buy builder.

You’ll then need a 5% deposit, and the government will lend you up to 20% of the value of the home (or up to 40% in London) and you’ll need a mortgage of up to 75% for the rest (or up to 55% in London). There are different rules for equity loans in Wales.

Once you have bought your home using the Help-to-Buy Equity Loan you’ll have 5 years before you’ll have to pay equity loan fees on the 20% the government lent you. (4)

Starter Homes

Another Government funded scheme is the Starter Homes scheme, which will support home builders in offering first time buyers a 20% discount on the purchase price of new homes worth up to £250k across the UK, or up to £450k if you’re buying in London. (4)

Lifetime ISA

Announced in the Chancellors 2016 Budget, the new Lifetime ISA offers a tax-free boost of up to £1,000 per year, which can be put towards buying your first home. These accounts will be available from April 2017 and they are open to savers aged under 40 years old.

You can contribute a maximum of £4,000 per year and then opt to use your Lifetime ISA cash as the deposit on a home worth up to £450k. (5)

So with so many schemes still on the table, 2017 will continue to offer first time buyers a wealth of great incentives to take that first step on the property ladder, without the Mortgage Guarantee scheme. If that’s you, start your home buying journey today with New Home Finder: 

Publish date: 15/09/2017