First-time buyers have just weeks left to apply for the Help to Buy scheme before it closes for good.
Help to Buy allows savers to purchase a house using a Government equity loan to help with the deposit.
The idea is that you can have a smaller deposit and still get on the property ladder - although the equity loan from the Government needs to be paid back, with interest.
You need to have a 5% deposit to use the scheme, with the Government then lending you up to 20% of the property price, or 40% in London.
But the scheme is closing for applications at 6pm on October 31, with Help to Buy ending on March 31, 2023 - unless it gets extended.
Since 2013, just shy of 340,000 homes have been bought using the equity loan scheme.
We explain how Help to Buy works - and what other support is out there for first-time buyers.
Help to Buy explained
Help to Buy is only available on new-build properties and there are maximum property values set for different parts of England.
For example, the maximum property price for buying in the north east of England is £186,100, rising to £600,000 if you’re buying in London.
This particular scheme is only available if buying a home in England, but a similar version is also available in Wales.
Here is a breakdown of the regional price caps from highest to lowest:
- London: £600,000
- South East: £437,600
- East of England: £407,400
- South West: £349,000
- East Midlands: £261,900
- West Midlands: £255,600
- Yorkshire and The Humber: £228,100
- North West: £224,400
- North East: £186,100
You'll have to start paying interest on the loan after five years, at a rate of 1.75%, so keep in mind this added cost to your repayments.
Other first-time buyer schemes
Lifetime ISA
With a Lifetime ISA (LISA) account, you can get a free 25% cash boost from the Government if you're saving for your first home or retirement.
You can save up to £4,000 each tax year, meaning the maximum bonus you can pocket is £1,000.
The maximum bonus is £33,000 if you open it at 18, and max it out until you turn 50 - you can’t pay into a LISA beyond the age of 50.
Anyone who is aged 18 to 39 can open a Lifetime ISA for free - and if you're in a couple, you can open one each.
You'll pay a penalty and lose your bonus if you take money out of your LISA account for anything other than your first home or retirement.
Help to Buy ISA
Help to Buy ISA accounts closed to new savers on November 30, 2019 - but if you’ve already opened an account, you can keep saving until November 30, 2029.
You must also claim your bonus by December 1, 2030.
When they first launched, you could open an account with a maximum of £1,200 but after that you're limited to saving £200 a month into it.
The government then tops up your savings with a 25% bonus - the maximum you can get free is £3,000, and you'd need to save £12,000 to get this.
Mortgage guarantee scheme
Through this initiative, savers can put down a 5% deposit and the government acts as a guarantor if they miss a payment.
But, while the scheme is marketed at first-time buyers, it’s not just limited to those hoping to get on the ladder for the first time.
Guarantor mortgages will be available to anyone buying a property costing up to £600,000, unless they are investing in buy-to-let or second homes.
Critics of the scheme point out that you’ll save money in the long-run if you can afford a bigger mortgage.
Some lenders also offer 5% mortgages outside of the government-backed scheme that may be cheaper for borrowers.
Shared ownership
This is where you buy a share of a property - between 25% and 75% of the property value - and pay rent on the rest.
The share you can buy is usually between 25% and 75% but can be as low as 10% on some homes.
You can buy additional amounts under what's known as “staircasing” which is where you slowly increase the amount of the property you own.
Shared ownership isn’t limited to first-time buyers, but to be eligible, you need to have an individual income no greater than £80,000 a year or £90,000 a year in London.
Your combined income can't be greater than these caps if you're buying as a couple.
