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A fifth of first-time buyers unaware of affordable homeownership schemes

A fifth of first-time buyers unaware of affordable homeownership schemes
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
05/07/2024
Updated:
05/07/2024

One in five first-time buyers do not know about the affordable homeownership schemes that could be available to them, a survey from a developer revealed.

Barratt Homes polled 500 first-time buyers and found the mortgage guarantee scheme had the least awareness, with 88% of respondents expressing unfamiliarity.

The Government’s mortgage guarantee scheme was launched in 2021 to encourage lenders to resume lending at 90% loan to value (LTV), with the state taking on some of the risk.

Since then, 42,800 loans have been completed through the scheme, and in its manifesto, the Labour party pledged to make it permanent instead of being withdrawn in June next year.

There does seem to be some interest in the initiative as, based on Google keyword planner data, Barratt found that the mortgage guarantee scheme had been searched an average 2,900 times each month for the last year. The most commonly searched for query was “how do I apply for the mortgage guarantee scheme?”.

Some 87% of respondents said they did not know about guarantor mortgages, which is when parents can use their own property or savings as security for their child’s mortgage and agree to cover any missed payments.

According to Barratt, this was searched 5,400 each month over the last 12 months and the most searched question was “who can be a guarantor for a mortgage?”.

The First Homes scheme has been searched an average of 14,800 times every month the Google data suggested, and was better known among first-time buyers, with a smaller proportion – 63% – not knowing what it was. The most common question asked by those looking up the scheme on Google was “how do you apply to the first homes scheme?”.

The Government’s First Homes scheme offers first-time buyers a 30% discount on the market value of a property and launched in 2021.

There was more knowledge of shared ownership, with 58% of respondents being unaware of the scheme. This generated an average of 40,500 searches each month on Google for the last year. The most commonly asked question was “who pays for household repairs?”.

First-time buyers were most aware of the Lifetime ISA, with just 51% saying they had no knowledge of the scheme. This received 74,000 Google searches every month on average and the most frequently asked question was “when is the Lifetime ISA bonus paid?”.

First-time buyers need understanding of affordable homeownership schemes

Steve Mariner, sales and marketing director at Barratt Homes, said: “Affordable homeownership schemes are great for helping first-time buyers get onto the property ladder, and having a variety of schemes available means that they can choose the best fit for them, depending on their circumstances.

“We have just launched a new shared ownership scheme with Legal and General Affordable Homes called Kickstart, so prospective buyers have even more options to explore. With schemes like these, your deposit is lower, your mortgage is smaller, and you can buy a larger share in your future.”

He added: “However, first-time buyers need to understand the ins and outs of each scheme first before deciding which would work best for them. This is why speaking to mortgage experts for guidance is always recommended.”

This article first appeared on our sister site, Mortgage Solutionshere.