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A new first time buyer scheme called Your First Home has been announced for England, aimed at helping eligible buyers purchase a new build home with a smaller deposit.
The scheme is expected to support first time buyers with a 2.5% deposit, backed by a government equity loan of up to 20% of the property’s value when buying from a developer signed up to the scheme.
Full details are due to be confirmed at the October Budget, including costs, eligibility and when the scheme will launch.
This does not mean buyers should rush into a new build purchase now. The scheme is not available yet, and the final rules will matter.
For now, the useful step is understanding what you may be able to afford, what your monthly mortgage payments could look like and how a new build purchase may work for your circumstances.
What Has Been Announced?
Your First Home is expected to be a government-backed equity loan scheme for first time buyers in England.
The Government has said it will be aimed at buyers purchasing a new build property from a developer that has signed up to the scheme.
It is also expected to include an initial interest-free period on the equity loan.
The final details have not been confirmed yet. The Government has said the scheme will include a household income cap and local property price caps, with more information to follow at the Budget.
What Could This Mean For First Time Buyers?
If launched as expected, Your First Home could reduce the deposit needed to buy a new build home in England.
A smaller deposit may help buyers who can afford monthly mortgage payments, but have found it difficult to save a larger deposit while renting or dealing with other costs.
That said, the scheme will only be one part of the purchase. Buyers will still need to meet mortgage affordability checks, lender criteria and the scheme rules once they are confirmed.
Should You Wait For The Scheme?
If you are hoping to buy your first home, it may be worth keeping an eye on the Budget before relying on the scheme.
The deposit figure sounds encouraging, but buyers still need to know the full costs, the property price limits, income rules, developer participation and how the equity loan will work over time.
Waiting for the final details does not mean doing nothing. You can still start looking at your mortgage position, deposit, income and likely monthly payments now, so you have a clearer idea of where you stand once the rules are published.
Buying A New Build With A Mortgage
New build purchases can work slightly differently from buying an older property.
You may be reserving a home before it is fully built, working to developer deadlines and needing a mortgage offer that fits the expected completion timescale.
If Your First Home is confirmed at the Budget, buyers will also need to check that the property, developer and mortgage all fit the scheme rules.
This is why it can help to speak to a mortgage advisor before getting too far into the process.
Speak to a Mortgage Advisor
If you are a first time buyer considering a new build, now could be a good time to understand your mortgage options.
You do not need to rush into a purchase before the full scheme details are confirmed.
Instead, you can check how much you may be able to borrow, what your monthly payments could look like and which types of new build homes may fit your budget.
At UK Moneyman, our mortgage advisors can talk through your first time buyer options and help you prepare for the next steps once the Your First Home scheme details are confirmed.
