Government schemes for first time buyers.

Buying your first home is exciting but can also be daunting and nerve wrecking. Choosing a mortgage is actually more straight forward than you might initially expect. There are a number of government schemes to help you buy a home such as Help to buy, shared ownership and more.     

Help to Buy – guarantee scheme
Want to go down the standard mortgage route but only got a 5% deposit? Then you may find this scheme kicks in when you apply for a mortgage – it’s available on any type of property and works just like a standard mortgage.
Lenders are able to buy a guarantee from the Government where the loan-to-value (LTV) ratio is between 80% and 95% (ie, where there is a small deposit). The result is that if a borrower has their home repossessed, the Government will cover some of the losses to the lender.

The insurance is for the lender, so it doesn't mean borrowers' payments are guaranteed or that a borrower will have any debt forgiven (ie if you fall into arrears).

Help to Buy - Equity loans –  is a government scheme for those who have a small deposit, when buying a home. This is only available if you are buying a new build home. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have a 5% deposit.

London Help to Buy - If you want to buy in London, the government lends you up to 40% of the property value (interest-free for the first five years). This substantially reduces the monthly costs in the first five years and should give you access to cheaper mortgage products, as you only need to borrow 55% of the value from the lender.

Mortgage guarantees – available for new and old properties across the UK. The government undertakes to cover any of your mortgage lender’s losses as a result of any problems you might have in paying it back. However, you are still responsible for keeping up your mortgage repayments on a Help to Buy scheme in exactly the same way as any other mortgage.

With both schemes there are limits on the cost of the property you buy. These limits differ across the UK.

Shared ownership

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 and you have the option later on to buy a bigger share in the property up to 100% of its value.

These schemes are mainly aimed at helping first-time buyers, and are often reserved for people wanting newly built homes.
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