One in five first-time buyers are unaware of affordable homeownership schemes.
According to Barratt Homes, Lifetime ISAs and Shared Ownership are some of the least recognised schemes among first-time buyers. This is despite the fact that they offer a pathway to owning a property.
And there’s a raft of other affordable homeownership schemes that can help aspiring buyers onto the housing ladder. But awareness is not as high as it could be among first-time buyers.
Steve Mariner, sales and marketing director at Barratt Homes, said: “Affordable home ownership 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.
“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.”
Shared Ownership schemes
Despite generating an average of 40,500 monthly online searches, over half (58%) of first-time buyers remain unaware of the Shared Ownership scheme and its potential benefits for helping them enter the property market.
Terry Higgins, Group MD for TNHG New Build Mortgage Services, said: “Shared Ownership allows first-time buyers to purchase a share in a new-build or resale property, where they pay a mortgage on the share they own and subsidised rent on the remaining share to a housing association.
“As the purchaser only needs a mortgage for the share they are purchasing, the size of the deposit is usually lower than the amount required when purchasing outright.
“There’s an option to increase the share in the property via a process known as ‘staircasing’, and, in most cases, you can staircase to 100%. In this instance, the shared owner will no longer pay rent, just their mortgage along with any relevant service charges and ground rent.”
Lifetime ISAs
Lifetime ISAs consistently generate the highest monthly search volume (74,000 monthly searches) among the existing affordable home ownership schemes. But over half of first-time buyers are not taking advantage of their benefits.
A Lifetime ISA can be used to buy your first home or save for later life. To qualify for a Lifetime ISA, you must be 18 or over but under 40. Each year, you can deposit up to £4,000 until you’re 50 years old, and you must make your first payment before you turn 40.
Higgins said: “This scheme works differently to a normal savings account as the Government adds a 25% bonus to your savings, up to a maximum of £1,000, per year.”
First Homes scheme
The First Homes scheme is exclusively targeted at first-time homebuyers aged 18 or over in England who have less than £80,000 in combined income.
It allows them to purchase a new-build home with a minimum discount of 30% up to a maximum of 50%.
Potential properties include new homes built by developers or homes purchased through an estate agent, provided someone else bought them through the scheme earlier.
Higgins noted: “Councils may have specific eligibility criteria for the First Homes scheme, such as prioritising key workers, local residents, or those with lower incomes. To find eligible homes, explore listings by participating developers or estate agents in your area. Reach out to them to express your interest, and they will guide you through the application process and submit it to the local council.”
Guarantor mortgages
Guarantor mortgages enable parents to help their child buy a home by using their property or savings as assurance, and agreeing to cover mortgage payments if any are missed. Some guarantor mortgages can allow people to borrow up to 100% of the property’s value.
This scheme is useful for first-time buyers on lower incomes who don’t have a large deposit.
Higgins added: “Traditionally, the co-signer for a mortgage was a parent or close family member, but lenders may extend this to family, friends, or loved ones. In certain cases, support can be provided by up to four individuals.”
