Financial help for first time buyers

by Leeds Building Society

Warning: THE MORTGAGED PROPERTY (WHICH MAY BE YOUR HOME) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Focus on financial help for first time buyers.

When buying your first home it can be difficult to save up a sizeable deposit, but there is support out there to help you get your foot on the housing ladder.

With a little bit of assistance from home ownership schemes backed by the government through the Homes and Communities Agency (HCA), you could turn your dream of owning a property into a reality.

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Here’s a guide to four government schemes available.

Help to Buy; Equity loan

An equity loan helps first-time buyers and home movers raise a larger deposit on new-build properties worth up to a maximum of £600,000.

While you will still have to raise at least 5% of the property price, the HCA can provide an equity loan of up to 20% of the purchase price, meaning you’ll only need to arrange a mortgage on the remaining 75% of the property price.

What’s more, no interest will be charged on the equity loan for the first five years. After that, you will pay a fee of 1.75% rising annually by the increase (if any) in the Retail Price Index plus 1%.

Rules:

  • The property must be your only home.
  • You will not be allowed to sub-let.
  • Available on new-build properties only.

Further details on Help to Buy; Equity loan can be found on the Help to Buy website

Help to Buy; Mortgage Guarantee

For those with a 5% deposit, your lender might be able to buy a guarantee from the government. Because of this, lenders are able to offer higher loan-to-value mortgages (80-95%) to potential home buyers.

Once again this scheme is open to first-time buyers and home movers on properties valued at £600,000 or less.

Rules:

  • The property must be your only home.
  • You will not be allowed to sub-let.
  • You should apply directly to one of the participating mortgage lenders.

Leeds Building Society does not provide Mortgage Guarantee products.

Further details on the Mortgage Guarantee scheme can be found on the Help to Buy website

Shared ownership

For those struggling to raise a full deposit, you could buy a share of a property and pay rent on the remaining amount.

Shared ownership schemes allow you to own part of a property and lease the rest from a housing association.

Rules:

  • You must earn less than £60,000 a year (different rules apply for those looking to buy in London) and be a first-time buyer (or you used to own a home but can no longer afford to buy one.)
  • You will pay rent to the housing association, alongside your monthly mortgage payments.
  • You may be able to increase your share in your home - a process called ‘staircasing’.

Further details on shared ownership can be found on the Help to Buy website

NewBuy

NewBuy allows you to purchase a newly built property worth up to £500,000 with a 5% deposit.

Rules:

  • The property must be built by an approved builder taking part in the scheme.
  • You must have a minimum deposit of 5%.
  • The property must be your main residence.

The NewBuy Scheme is open to anyone wishing to buy a new home - including first time buyers. To be eligible you must be a UK citizen (or have the right to stay in the UK indefinitely) and the property must be your sole residence.

Currently, Leeds Building Society does not provide NewBuy mortgages.

Further details on NewBuy can be found on the Help to Buy website

Are you a first time buyer? Take a look at our First Time Buyers guide

This guide is intended as a summary only and does not constitute legal advice given by Leeds Building Society. No reliance should be placed on this guide and you must make your own decisions, we recommend that you seek legal and/or financial advice if you have any questions or queries.