With house prices getting further out of reach for first time buyers, mortgages becoming harder to come by and interest rates starting to rise once more, the government have rightly put a number of schemes in place to help first time buyers take their first step onto the property ladder. If you are hoping to purchase your first home but aren’t sure how you will be able to afford it, one of these schemes may provide the helping hand you need.

Help to Buy

This scheme falls into three categories:

Help to Buy ISA

What it is

This is a savings scheme in which the government will contribute an additional 25% to everything you manage to save. You can put down an opening deposit of up to £1,200 and you’re allowed to save a maximum of £200 per month. The minimum amount before you can claim any money towards the cost of a home is £1,600 (which would give you a total of £2,000); the maximum amount you can put into the ISA is £12,000, (which would give you a total of £15,000).

Who can use it?

This scheme is open to anyone who is a first time buyer, as long as they don’t own a property anywhere else in the world.

Is it right for me?

25% is a better rate of interest than the majority of other savings funds you’ll encounter, so it’s definitely a good deal as long as you definitely want to use the money for your first house. Claiming your bonus involves going through your solicitor when you wish to purchase the house, so you won’t be able to claim the money for any other purpose. The great thing about the ISA is that it’s a little more flexible than the Help to Buy Equity Loan, in that you can use it for any kind of property, not just new builds.

Help to Buy Equity Loan

What it is

This is a loan that enables buyers who aren’t able to save a big deposit to get better mortgage deals. With just a 5% deposit, you can borrow up to a further 20% of a property’s value. This will enable you to put down a higher deposit and therefore obtain better rates. The loan is also interest free for the first five years, after which you’ll begin to pay 1.75% in the sixth year, and a 2.75% from then on.

Who can use it?

Anyone can apply for a Help to Buy Equity Loan, regardless of whether this is their first home or not. As long as the property is worth £600,000 or less and you intend to use it as your first home, you qualify.

Should I use it?

It’s worth being aware that this is a loan solely for new build properties. If you’re not sure whether these represent a good deal, this type of loan might not be the best option for you.

Help to Buy Shared Ownership

What is it?

This is an option for those who aren’t able to obtain a mortgage for the full value of the home they wish to buy. The government’s solution is that they’ll buy the remainder of the home for you and then rent the share of the property they own back to you. The government will buy between 25% and 75% of your home via this scheme.

Who can use it?

Anyone earning £80,000 or less (£90,000 or less in London) is eligible to apply for the scheme, as long as they don’t currently own property.

Should I use it?

If a poor credit rating or an insecure employment situation are restricting your mortgage options then this could be a good way to make your home ownership dream come true. You’re not quite as restricted to new builds as you are with the equity loan, as you can also use the shared ownership scheme for other properties sold by housing associations, so you have more choice about the home you buy. And you always have the option to purchase more of the house as and when you can afford it.

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