What is the The First Homes Scheme?

First homes are new build flats and houses built on developments situated up and down the country. They are available at a discount of at least 30% and local councils can decide to allocate further discounts, to make the scheme more affordable for local applicants. Key workers and First Time Buyers are eligible for the scheme, which potentially is exciting news for a lot of people who had previously given up on the thought of homeownership.

When the owner of the property wants to sell it on, the 30% (or more) discount they receive must be passed on to the next person buying it, who will also be a key worker and First Time Buyer. 

How does the The First Homes Scheme differ from the Help to Buy scheme?

The Help to Buy scheme was a scheme where the government gave you a loan to pay for a percentage of the property, which you don’t pay any interest on for the first five years. This scheme has now finished, however. The First Homes Scheme offers homes at a discounted price offering a new way to get key workers onto the property ladder.

How much will the homes cost?

Unfortunately, the scheme is only available in England at the moment and there is a  minimum of 30% discount, but your local authority can give you a bigger discount. First Homes properties will have a price cap £250,000 outside of London and £420,000 in London.

You can’t own or have interest in a property to qualify, and if your household earns more than £80,000 or £90,000 in London, you won’t qualify for the scheme. It’s not open to people with large deposits either, as you’ll need to get a mortgage of at least 50% of the value of the property, so it’s really there to help cost wise, for those who need it.

How much deposit will I need?

Based on a 30% discount making homeownership possible for many First Time Buyers or key workers, it’s important to bear in mind that the mortgage will need to be obtained to finance the rest of the purchase. 

Your mortgage lender is likely to require a deposit, although what deposit you’re asked for can vary widely depending on the lender, its appetite to lend to you and your personal circumstances. Some lenders might not need you to add any additional deposit to the amount already discounted, just like the Right to Buy scheme.

Many first time mortgages require a deposit minimum of 5%, so if you take one of these properties, after discount, at a cost of £210,000, a 5% deposit means you need to save up £10,500.

Will the First Homes Scheme be worth it? 

It will depend on individual circumstances whether it will be helpful or possible for people to use the scheme, however, the idea is that it helps you to buy a home and become a homeowner where you perhaps weren’t able to before, so for that reason, it’s definitely worth it.

What’s the application process?

You will definitely need to contact your local authorities to see if you qualify and put your application through that way.

You will then approach a Mortgage Broker or a lender, to make sure you’ve got the mortgage loan Agreement in Principle in place, to cover the rest of the finance.

How can Pia help?

We can keep you updated as we hear more about the scheme, but you don’t need to wait until it’s available in your area. We are happy to speak to you in advance, talk through your finances and see whether this will be an option for you and whether a Mortgage Lender would theoretically be able to lend you how much you need.