First Homes Scheme Deposit Requirement For First-time Buyers
Finds buying the first dream place impossible due to high housing prices? Well, homeownership was not always easy, so the government introduced the First Homes Scheme recently to support first-time buyers and local key workers. The newly-built homes will be providedat a discounted rate from the actual market value.
But the real question here is who is eligible for this scheme and how to apply? Don’t worry, in this guide, Real Estate Agents London discuss your concerns clearly from every perspective and provide the pros and cons of this scheme.
What Is The First Homes Scheme, And How Does It Work?
This scheme is specifically designed to help first-time buyers in England. Under this project, eligible candidates can purchase newly-built homes at a discount of at least 30% or 50%. For example, a property has a market value of £315,000, but it could be offered at £220,500 (a 30% discount) or £157,500 (a 50% discount) under this scheme.
Furthermore, after the discount price is applied, the maximum value for the first homes in England must not exceed £250,000 and £420,000 in London. The properties this scheme offers are:
- Newly-built homes by developers
- First homes purchased by someone can be resold to new eligible buyers by following the scheme’s rules and regulations.
Eligibility Criteria For First Home Buyer Scheme
You must meet the following first-home buyer eligibility criteria to qualify for the scheme:
| Eligibility Criteria | Details |
| Age requirement | Applicants must be at least 18 years old. |
| Homeownership restriction | You must not have previously owned or inherited a home in the UK or abroad. |
| Income cap | Household income must not surpass £90,000 in London or £80,000 elsewhere in England. |
| Mortgage requirement | You must be able to get a mortgage covering at least 50% of the home’s price. |
| Residency requirement | The property must be your only or main residence. |
| Buying with others | All applicants must be 1st-time buyers and apply together, even if they are not all getting a mortgage. |
Additional Local Eligibility Conditions
Some housing authorities or councils have local eligibility criteria to use to prioritise who will receive First Homes discounts. When a property is listed, there is only a first 3-month time limit for this local criterion to apply. However, the schemes’ eligibility criteria must be met even if you fall under the local exemption category.
Priority groups:
Key workers, residents (people already living in the area, and lower-income earners.
Exemptions:
Armed forces members, veterans (left within the last 5 years), divorced or separated spouse or civil partner, and widows or widowers (if death was wholly or partly service-related).
How To Apply For The First Homes Scheme?
The following table highlights the step-by-step process of buying the First homes successfully:
| Step | What You Do |
| 1. Find a First Home | Visit a development selling these properties and select the desired home. |
| 2. Initial Eligibility Check | The real estate agent team you hire will check your eligibility. |
| 3. Get Advice | Speak to a mortgage advisor and solicitor. |
| 4. Submit Documents | Provide income & mortgage evidence. |
| 5. Apply to Local Council | Complete the application process and apply. |
| 6. Reserve & Sign Declarations | Pay the reservation fee and sign the forms. |
| 7. Approval | Local authority issues Authority to Proceed. |
| 8. Apply for a Mortgage | Submit a full mortgage application for an amount that will cover at least half of the purchase price. |
| 9. Legal Work | The Hired Solicitor will complete the paperwork. |
| 10. Exchange Contracts | Pay the deposit and, at the same time, exchange contracts with your developer or seller. |
| 11. Completion | Your conveyancer will transfer the remaining Mortgage funds, and at last you can move in. |
Letting Or Selling The Property Rules
The First Homes you buy must be your only or main home, but if you want to sell the property. Then, you must check if the next buyer meets the eligibility criteria. Plus, you need to resell homes at the same discount percentage you purchased with. However, you can also let the entire property or just one room to someone for 2 years, but you need approval from the local council and, in some cases, your mortgage lender.
What Are The Pros And Cons Of The First-Time Buyer Scheme?
These are the First-time home buyer advantages everyone should understand, because buying a house is a significant financial investment that requires a careful strategy.
Lower Deposit:
This scheme minimizes the upfront deposit requirements by providing a 30% discount rate. That can help buyers to purchase their first home easily at a lower price than the market value.
Affordability and Homeownership:
The actual goal of this scheme is to make homeownership accessible to individuals by reducing buying costs and the affordability gap.
Demographic Area:
By providing more buying opportunities, this scheme strengthens local communities and improves their demographics.
Here are a few downsides of the Scheme, too, which need to be weighed against the pros before applying:
Limited Number of Options:
Since this scheme applies to newly built homes, buyers may have fewer house options and not be able to own their desired or suitable homes.
High Demand:
If the demand for houses is very high in the area you are searching for, this, in turn, increases house prices.
Final Thoughts
If you really want to overcome high market prices and own your own home at a reasonable price, the First Homes Scheme is a good solution for you. This scheme not only offers low deposits but also provides greater financial stability. Moreover, from paperwork to transaction closings, Real Estate Agents London can guide you at every step. This doesn’t matter if you Buy Property or want Property Management services; we can make your overall experience smooth and stress-free by handling everything on time.
Frequently Asked Questions
Many mortgage lenders often verify the property value to determine if it is worth investing in or not. Plus, they check age requirements, credit score, employment history, and income cap. Hence, you must have a stable income to repay debt, a good credit score, and be 18 years of age or older.
Someone who does not have their main residence anywhere, either outright (purchasing without a mortgage) or jointly with someone else, will be considered a 1st-time home buyer.
The government recently introduced a new scheme by which eligible home buyers can purchase a property with a minimum 5% deposit of the house value in the market.
Buyers usually require a deposit of 20% of the home or property purchase price to get a loan. However, if the deposit rate is less than 20%, buyers need to pay for the Lender Insurance mortgage on the deposit.
Yes, the property after applying the discount must not cost more than £250,000, or £420,000 in London. Plus, these price caps only apply to the initial residential property sale, not to reselling.
Eligible buyers will own the entire property so they can do whatever they want. They can repaint, manage, change walls or anything else they want because they have full ownership. They don’t need to ask anybody’s permission (landlords) for any kind of changes or decorations.
You might be able to get approval for leasing a property if:
Your job location changes
Marriage or a relationship ends
You are taking care of a relative or a friend
You want to move out because of any type of abuse
Before selling the property, tell lenders and the local council that you want to resell it to new eligible buyers. Then, find a professional Real Estate agent team that will handle transaction processes in detail and manage any minor or home inspection issues.
Our Agents
Adil Saleem
Qaiser Masood
Rizwan Ashraf
Leave a Reply