House prices are often very high which can be especially difficult for first time buyers, however, thanks to the First Homes scheme, first-time buyers and key workers can buy a new build property that is discounted from its open market value.
To learn more about this route to affordable housing, keep reading to learn more.
What is the First Homes scheme?
The First Homes scheme launched in June 2021 and it is another government initiative to help first-time buyers get their feet on the property ladder. The first home scheme offers first-time buyers the ability to buy a new-build property for a discount of at least 30% – 50% of the property value.
This same discount will remain on the home forever, for all future sales, which means that every time this ‘First Home’ is sold, each buyer will benefit from a purchase price that is cheaper than the market value or market price on equivalent properties.
Who is eligible for this first-time buyer scheme?
According to Gov.UK, the eligibility criteria is:
- 18 years or older
- A first-time buyer
- Able to get a mortgage for at least half the property value
- Have a household income that does not exceed £80,000 (or £90,000 in London)
Some local authorities will prioritise first-time buyers who are key workers.
Key workers included for the first home scheme
- Teachers
- NHS workers
- Armed forces personnel
- Police officers
- Local authority workers
- Probation officers
The local authority might also prioritise first-time buyers with a low income or who are already living in the local area.
Learn more about mortgages for professionals here.
First Homes Scheme near me
Is the First Homes scheme still available?
The First Homes scheme is available to first-time buyers in the UK but there are currently a limited number of First Home houses available.
The scheme is aimed for local first time buyers. It ultimately depends on where you live as the programme is being rolled out on a site-by-site basis. If you live in Bolsover, West Midlands, where the scheme was first introduced, you may be able to buy a First Homes property.
The scheme has also been rolled out in certain areas within Staffordshire, Durham, and Hampshire. To find out about the availability of this new scheme in your area, you should contact your local authority.
First Momes Scheme Properties
Are there price caps on First Home properties?
Properties on this scheme are subject to a £250,000 price cap after the discount has been applied.
The exception is in London, where there is a higher cap of £420,000.
Local planning authorities are able to reduce these caps but they don’t have the power to raise them.
How much house deposit would I need using the First Homes scheme?
The 30%-50% discount will certainly make properties more affordable for future first-time buyers but a deposit will still be needed for the mortgage.
In some cases, you may need as little as 5% of the of the discounted purchase price dependening on the property. However, this will depend on the mortgage lender and your personal circumstances, as you may be required to pay more.
Other costs to consider when buying a property using the First Homes scheme
Thanks to high property prices, buying a home is always quite costly. Not only do you need to pay for the mortgage but you need to budget for other costs too. These apply to all buyers, as well as those on the First Home scheme.
Costs include:
- Solicitor fees
- Valuation fees
- Surveyor’s fees
- Removal costs
- Life insurance
- Home Insurance
These costs do add up so if you’re looking to get on the property ladder, you should start saving as soon as possible.
Thankfully, you can save money with your mortgage by seeking the help of a mortgage broker who has access to the cheapest loan deals (get in touch with our team).
If you meet the local eligibility criteria for one of the affordable homes within the First Home scheme, you will also benefit from the discounted price of the property.
If you don’t qualify for the First Homes scheme, all isn’t lost when you are trying to get on the housing ladder. You may still be eligible for other government schemes, such as the Help to Buy Equity loan programme that is also available for buyers new to the property market.
How can I apply for the First Homes scheme?
To apply for the scheme, you first need to contact the developer of the new-build home or an estate agent if you intend to purchase it from a previous First Home buyer.
After paying the reservation fee, they will help you complete the application which then needs to be sent to your local council.
If your application is successful, you will receive an Authority to Proceed and an Eligibility Certificate. You will need to give these to your mortgage provider (or your broker), and conveyancer so they can begin the next steps in the mortgage and buying process.
Before you apply, you should make sure you’re eligible for the scheme by contacting your local authority. If you are a key worker, your chances of approval will be improved.
We have many years of experience helping Nurses, Doctors, The police, and Teachers with first-home schemes. It’s been our observation that these schemes work really well at getting the first-time buyer on the property ladder. Our opinion is that their schemes are overly complicated however this is where our expert mortgage advisors can help as they have lots of experience and will help and guide our clients. – Stephen Roberts (Director)
What happens if my First Home application is approved?
If your application is approved, you need to…
- Hire a conveyancer to help you with the property purchase
- Give your conveyancer and lender (or your broker) the full details of the property
- Make your mortgage application
- Complete the legal documents sent to you by your council
- Exchange contracts with the developer (or property seller) if you receive a mortgage offer
After completing this next step you will be legally committed to buying the home. When the sale of the property has gone through, you will then be given a moving-in date.
Using a fee-free mortgage broker to manage my First Homes scheme property purchase
If you meet the local and national criteria for a property on the First Homes scheme, we can help you with the property purchase.
By criteria, we mean you are buying your first property, have local connections, and are considered to be a key worker (although some local authorities may waive this).
If you are eligible for the significant discount that is being offered through this scheme, you will be able to apply for your mortgage. We will:
- Help you find a lender that is suited to your circumstances
- Calculate how much you may be able to borrow after assessing your household income
- Assist you with your mortgage application
- Give you all the advice you need as you embark on your mortgage journey.
Get in touch with us today if you would like to learn more.
First Homes Scheme FAQs
How can I find the best deal for a First Homes scheme mortgage?
For the best deal on a mortgage, contact our expert team. As a whole of market broker, we have access to a wide range of lenders, including specialist lenders that can’t be found on the local high street. We will also have an understanding and knowledge of the local authority in the area you are buying. Applicants will also have to fit local eligibility criteria that will depend on the Local Authority.
What help does the government give to first-time buyers?
The First Home Scheme is an affordable way to buy a home as properties are discounted from the market prices. But this is only one government scheme available to you if you’re looking to get on the property ladder.
To help you save, the government offers the Lifetime ISA which is a savings account that can be used to save towards the purchase of your home.
To help you buy a property, you might also want to consider the Mortgage Guarantee scheme, or a Shared Ownership.
Is anyone exempt from having to meet the local connection criteria?
Local councils will typically favour local people when approving applications. However, the local connection criteria does not apply to serving members of the Armed Forces and recent veterans. Bereaved civil partners of service men and women who have died are also exempt.
