7 first-time buyer schemes that are available now Help to Buy has closed

Ten years after its introduction, the curtains are to be fully drawn on the Help to Buy equity loan scheme later this month.

Nearly 400,000 first-time buyers have made use of the initiative in England since its inception, and its exit could mean first-time buyers face more difficulty when trying to buy a home.

But there are several other schemes to consider that can aid those trying to get on to the housing ladder. 

Here, Which? details what support is available for first-time buyers, and the pros and cons that come with it.

Help to Buy officially ending on 31 March 2023

The popular scheme – which enables buyers to borrow an equity loan to cover up to 20% (or 40% in London) of their property's value – will be put to bed by the government on the final day of this month. 

Applications closed back in October last year, so prospective first-time buyers in England have been unable to register for Help to Buy support for a number of months. 

The last day of March is to be the final deadline for pre-agreed Help to Buy purchasers to complete their purchase and move into their home. If they don't complete by that date, the equity loan will be pulled. 

The deadline has been pushed back numerous times amid fears housebuilders wouldn't be able to complete on time – but the government stresses that the 31 March date is now non-negotiable.

In Wales, the Help to Buy deadline is set to be extended to March 2025. The Help to Buy Scotland scheme has already closed. 

Help to Buy equity loans have never been available in Northern Ireland. 

• Find out more: how Help to Buy equity loans work

What other first-time buyer support schemes are there?

With the average age of a first-time buyer having climbed to 32, according to data from Halifax, the need for support is greater than ever. High mortgage rates, inflated house prices and the cost of living crisis have left millions unable to afford to step on to the property ladder.  

So, what help is still out there?

Below, we look into seven schemes available to first-time buyers –  ranging from discount purchases and mortgage support to government bonuses.

• Find out more: is it possible to buy a home on your own?

1. First Homes scheme  

Exclusively offered to first-time buyers in England aged 18 or over, the First Homes scheme allows purchasers a discount of at least 30% when buying a new-build home. 

Not all new-build properties are part of the scheme, but the government has specified that a quarter of all affordable housing sold by developers must fall under the First Homes initiative.

First Homes must be sold at a discount of at least 30% of their market value, but local councils have been given the green light to apply for bigger price cuts of 40% or 50% on properties in their area, if they can demonstrate a need to do so.

To ensure the discount is based on actual market value, each home that’s sold is valued by an independent surveyor.

How to secure a discount with First Homes

To qualify for the scheme, you'll need to have had a household income of £80,000 or less (£90,000 or less in Greater London) in the tax year before purchasing the property. You'll also need to take out a mortgage of at least 50% of the purchase price of the property.

Councils can set their own eligibility rules – for example, the homes may be restricted to local buyers, or key workers could be prioritised.

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

What to be wary of...

Should you wish to move out, you can only sell properties bought via the First Homes scheme to another eligible buyer. 

The percentage discount that applied when you bought the property would also apply on the sale price. So if you purchased at a 30% discount, you'll also have to sell at a 30% discount – even if the price has increased or you've made improvements to your home.

• Find out more: how much can I borrow?  – use our calculator to find out how much a lender might offer you

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2. Mortgage guarantee scheme 

The government has this year extended its 95% mortgage guarantee scheme, which enables people to buy a property valued up to £600,000 with a 5% deposit. 

The scheme was launched in April 2021 in an attempt to encourage banks to start offering 95% mortgages again, after the majority were withdrawn during the pandemic. 

Unlike the First Homes scheme, it's not limited to new-build properties. This opens the door for cheaper properties, as new-build homes are likely to be at a premium price.

A 95% mortgage is useful for those struggling to save for a large deposit – but it comes with the risk of potentially falling into negative equity. As house prices are currently falling, a high LTV mortgage could result in your loan being worth more than your property's value.

Rates are also higher for 95% mortgages, so expect to be paying back a substantial amount each month. Currently, the best deal on a two-year fix will see you pay around 5.4% in interest.

If you can afford a bigger deposit, this will help you steer clear of the negative equity risk, and is likely result in a cheaper mortgage rate.

• Find out more: best mortgage rates for first-time buyers

3. Lifetime Isa

A lifetime Isa offers a way of earning a 25% bonus for your first house purchase, with the government paying up to £1,000 a year if you save the maximum £4,000. There are both cash and stocks and shares options, and all interest earned is tax-free.

Anyone between the ages of 18 and 39 can open an account to save up for buying a first home. The cash can be released after an initial 12 months, and the maximum house purchase price is limited to £450,000.

Lifetime Isas are limited per person, not per home – so if you're part of a couple, you can both open a lifetime Isa and benefit from the government bonuses before buying a property together.

Just be aware that you can only withdraw the money to buy your first home, or wait until you reach the age of 60 when you can spend the money as you see fit – otherwise you'll be hit with a 25% penalty when you withdraw your cash. This not only removes the government bonus, but also 6.25% of your own savings.

• Find out more: Isa types explained

Other ways to save for a deposit

While a lifetime Isa is the only way for new savers to get a 25% government bonus on their savings, there are other options for maximising your deposit savings:

• Help to Buy Isas: though they shut to new applications in 2019, existing Help to Buy Isas can remain open until 1 December 2030. The government tops up the account with a 25% bonus, up to a maximum of £3,000, paid on savings of £12,000. You're restricted to buying a property worth up to £250,000, or £450,000 in London. You can hold a lifetime Isa and a Help to Buy Isa, but you can only use the government bonus from one of these accounts to buy your first home.
• Offers from savings providers: many savings providers offer extra help for first-time buyers. For example, Coventry Building Society has recently launched a First Home Saver account, paying 4% AER. The account lasts for 36 months, and savers can deposit up to £1,000 a month, meaning they could earn up to £2,266 in interest. Plus, there's a £500 bonus available if you go on to take your mortgage from Coventry BS.

Find out more: how to find the best savings account

4. Shared ownership

Shared ownership is a 'part buy, part rent' initiative, which involves purchasing a stake of as little as 25% of a property from a housing association and paying rent on the remainder. 

If you need to borrow to purchase your stake, this means you'll be paying both rent and a mortgage at the same time. You'll also usually have to pay a service charge.

Shared ownership allows you to get a foot in the door – but you'll need to do your sums, as the combined costs can quickly add up. 

To be eligible, your household income must be less than £80,000, or £90,000 if you're living in London.

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5. Right to Buy

Council tenants have the opportunity to buy their home at a discount through the Right to Buy scheme.

You can get a discount of up to 70% off the purchase price of your home, up to a total of £116,200 in London and £87,200 elsewhere in England.

If you have spent at least three years living in a council house or flat in England, you are eligible. The three-year period doesn't have to be continuous  –  although you do need to have lived in your current home for at least 12 months.

If you've lived in a council house for at least three years, you can benefit from a 35% Right to Buy discount. After five years, this discount increases by 1% each year, up to a maximum of 70% if you've been a council tenant for 40 years or longer.

Buyers who live in a flat get an initial discount of 50% after three years, which increases by 2% each year after five years.

• Find out more: Right to Buy explained

6. Guarantor mortgages 

A guarantor mortgage allows parents to help their child buy a home by using their property or savings as collateral. In doing so, they also agree to cover mortgage payments if the homeowner misses a payment. 

They can prove useful for first-time buyers on lower incomes who cannot raise a large enough mortgage, or those who don't have a sufficient deposit. Some guarantor mortgages even allow you to borrow 100% of the property's value.

Those with a poor credit score can also utilise guarantor mortgages. If, for example, you've never had a credit card, lenders won't have any evidence of how well you deal with debt, so having a guarantor could mean they're more inclined to give you a mortgage.

Note that going down the guarantor route will create a significant financial link between you and your helper. The guarantor could be liable for any shortfall if your property has to be repossessed and sold, which could mean losing a huge chunk of their savings, or even losing their own home.

7. Deals from developers

Housebuilders may offer incentives for first-time buyers in an effort to drum up interest in their developments  – these will vary depending on the location and developer. 

Earlier this year, housebuilder Fairview launched a Save to Buy scheme, which sees all money first-time buyers pay in rent go towards a deposit for their home. 

Once a sufficient deposit has been accumulated, they can then apply for a mortgage for the property they are already living in.

The scheme is currently being offered at two developments:: New Hayes in west London, and Epping Gate in Loughton, Essex. Fairview expects to expand the scheme this year.