It’s no easy feat getting a foot on the property ladder in the UK, especially as you try to get approved for a mortgage with a down payment. But there’s good news for first-time buyers!
The UK government has partially made the lives of first-time home buyers easier. They’ve introduced first-time home buyer schemes that apply to some UK homes, and the main one to consider is the First Homes scheme. What makes this scheme an incentive is that it offers discounts on specific properties to UK residents.
There are still many challenges, even with the scheme. With housing affordability also through the roof, you might be looking for solutions or even considering moving abroad – an alternative way to achieve your dream. Here, we’ll break down what the First Homes scheme is and explain how you can become a homeowner more easily.
What is the First Homes Scheme?
Offering first-time buyers specific new homes at a discounted price, the First Homes scheme means that eligible first-time home buyers do not need to pay the property’s full market value. It’s designed to help you purchase new-build homes, though it also applies to some resale homes that were originally sold under the scheme.
Years of saving for a 20% deposit on a mortgage are a reality for many first-time home buyers – the median deposit for first-time buyers has tripled from £13,600 to £37,400 on average since 2006, according to the FCA, and, at the same time, the prices of properties are on the rise.
For instance, the average house prices in the UK have exceeded £256,000 since March 2021, according to Statista. But that’s where the First Home scheme can be partially useful if you qualify.
The scheme opens some doors for you, offering a 30% to 50% discount on eligible properties. So, as an example, a new-build home’s market value might be £250,000, but under the scheme and with its 30% discount, you could purchase it for £175,000.
How Does the First Homes Scheme Work?
The scheme’s discounted prices are key, but how does it work? The process generally starts by looking for a new home in your location, which you can do by checking out those that developers or estate agents advertise through the First Homes scheme.
There’s a catch in terms of the eligible property value – after the discount is applied, the price of new build home generally can’t be more than £250,000 (or greater than £420,000 if the home is located in London) according to the regulations.
Typically, an independent surveyor will establish the discounted purchase price to maintain fairness and account for the actual market value.
The scheme supports full ownership, so it’s unlike shared ownership because you own 100% of the property and don’t need to pay rent. In other words, what you own is the entire discounted price.
What are the Eligibility Requirements for the First Homes Scheme?
Aside from the eligible property value restrictions mentioned, specific local eligibility criteria and home eligibility criteria may determine who can receive the First Homes discount or who is a priority. Here are a few of the eligibility requirements for this scheme:
- You have to be a first-time buyer, which applies even if you’re buying a property with others. So in this case, according to the UK government website, whoever applies with you must also be a first-time buyer.
- You must be 18 years old or over.
- Keep in mind that your joint household income when applying with others can’t exceed £80,000 annually before tax, or £90,000 before tax if the home is in London.
- Key workers, individuals who live in the area, and those on lower incomes may count as priority buyers, and the local authority may aim to offer the First Homes discount to them first.
Caps on Income and Mortgage Eligibility Expectations
These caps on income apply to applicants applying on their own as well. So you are not eligible for this first-time buyer scheme if you earn more than £80,000 a year before tax (or £90,000 a year if the property you’re interested in is in London).
A different matter altogether, though, is that there are specific mortgage eligibility expectations with the First Homes discount. You need to be eligible or able to obtain a secure mortgage for at least 50% of the price of the home to qualify for the discount.
How Can I Apply for the First Homes Scheme?
If you’re moving toward buying your first home, and the First Home scheme aligns with your situation, you can apply for it by completing the steps below:
- Apply for help by reaching out to the estate agent or property developer and letting them know you want to buy a home through the scheme.
- Once they’ve checked you qualify, provide them with the details of a conveyancer.
- The estate agent or property developer will forward your application to the local council.
- If you’re interested in a new build, you need to pay the required reservation fee.
- With the approval of the council established, contact your conveyancer and proceed to set up your mortgage.
Can You Use the First Homes Scheme to Buy a House Abroad?
Unfortunately, it’s not possible to use the First Homes scheme to buy a house abroad. The scheme is only based in England.
Yet, here’s the good news. There are other ways to purchase your first home abroad, one of which is to rely on UK services such as international banking for expat mortgages. One provider of such services is HSBC, but a UK expat bank account will be required.
The other way is to seek support from a foreign lender, and Upscore’s Finance Passport can help. It matches you with mortgage lenders abroad that align with your needs, whether you’re currently abroad or in the country you intend to live in.
The Upscore Finance Passport helps you check your eligibility, compare mortgage offers, and get the support of an agent until the completion date. This makes owning your dream home much more achievable.
How Upscore Can Help
If your goal is to purchase a property in the UK, the First Homes scheme might help, but you’ll still need to face many eligibility criteria and high housing costs. For this reason, moving abroad might be a better option, and signing up for Upscore’s Finance Passport is your key to becoming a homeowner in Spain, France, Portugal, Italy, the US, or other locations.
Navigating the world of mortgages is a smooth, convenient, fast, and personalised process with the Finance Passport. It ensures you can apply for your mortgage with overseas lenders remotely and get a dedicated agent for the mortgage application process.
Complete mortgage lender comparison easily. Sign up for the Upscore Finance Passport today!
