First Homes Scheme

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David from The Mortgage Advice Centre discusses all we need to know about the new First Homes Scheme. 

What exactly is the First Homes Scheme?

The First Home Scheme is a new government incentive that’s been available in Scotland for a few years. England and Wales are now also able to take advantage of the scheme, where new homes are being built to be sold to First Time Buyers and key workers at at least a 30% discount on the market value or up to 50% discount in London

It’s a great scheme to help people get onto the property ladder, especially when the cost of properties are still spiralling to greater than people’s earnings.

How does this differ from the Help to Buy scheme and the Mortgage Guarantee Scheme?

The Help to Buy scheme is a shared equity scheme, which means you don’t own all of the property. After five years, you have to start servicing the interest on the loan that’s helped you to buy your home.

The mortgage guarantee scheme really just enables people to buy any home, new build or otherwise, with a 5% deposit. This scheme allows people to buy with a discount of 30%. There is no interest to pay or loan to pay back. When the property is sold, the discount is passed onto a subsequent buyer, so the discount always remains in the property.

How much do the new build homes cost under the scheme?

Outside of London and the greater London area, the cost of the home after the discount can be no more than £250,000 after the 30% discount. In the greater London area the home can be up to £450,000 to reflect the higher prices in London.

How much deposit will I need?

Much the same as any mortgage at the moment, the minimum deposit needed to buy property on a First Home Scheme is 5%,  but it can actually be no more than 50%, as the discounted properties are not available to people with more than 50% deposit available.

Is the First Homes Scheme worth it?

Key workers do an amazing job but don’t necessarily have the pay to reflect that, so this is a good way that they can get onto the property ladder, especially in the south, where property prices are increasing massively against wages.

When will the scheme be available or is it available now? 

The scheme became available in June 2021, where it started off in the East Midlands area with fifteen hundred properties. As Mortgage Lenders start to get to grips with the mortgage products and developers and the builders start making more properties, the aim is to get up to ten thousand new properties built every year.

How can a mortgage broker like The Mortgage Advice Centre help?

At present, even though it’s been launched, there isn’t a website for the scheme that shows where these properties are. In the future there will likely be some kind of portal where the builders and developers can share the properties available with the market.

From a Mortgage Broker perspective, it’s really important as a First Time Buyer or key worker, that you get the right advice about how this scheme works. Mortgage Lenders may not necessarily cover the First Home Scheme, as there are right now, a limited number of mortgage lenders who are willing to lend on this, but hopefully that list will expand in the future. But definitely it’s important to speak to an expert on this scheme to know how to get a mortgage for this type of property.

From the Mortgage Advice Centre website navigate to the contact page and get in touch with a member of the team.


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