Help to Buy Alternatives for First-Time Buyers

Help to Buy Alternatives for First-Time Buyers

The Help to Buy Equity Loan scheme, which was designed to help first-time buyers in England purchase their first home, has now ended.

But that doesn't mean that there aren't other options available for those looking to get onto the property ladder.

It can feel harder than ever for first-time buyers to purchase their own home, but there are still options. At Teito, our friendly team of expert mortgage advisors have helped countless first-time buyers take the first step on the property ladder. We can provide advice and guidance on the best options for your individual circumstances, and as a whole of market broker, we have access to the best deals from the entire lending market.

No matter what option you choose, it's important to research all of your options thoroughly and speak with an independent mortgage advisor before making any decisions.

Lifetime ISA

The Lifetime ISA, or LISA for short, is a tax-free savings account that allows people between the ages of 18 and 39 to save up to £4,000 each year and receive a 25% government bonus of up to £1,000.

This money can be used towards buying a first home worth up to £450,000 or saved until the age of 60 when it can be withdrawn without any tax penalties. Contributions can be deducted from your salary before you pay income tax so you’ll get more bang for your buck.

Funds held in a LISA are under "protected status", meaning that if you need access to your cash for any other purpose than buying a first home or retirement, you’ll be subject to a withdrawal charge.

Overall, the Lifetime ISA is a great way for first-time buyers to get the most out of their money and become homeowners sooner. It can provide an extra boost towards saving up for a deposit and help you avoid taking on costly debt.

Traditional Guarantor Mortgage 

Guarantor mortgages are a type of mortgage where the buyer's parent or another close family member agrees to financially guarantee the new mortgage. This means that if the borrower fails to make their payments, the guarantor will be responsible for them. This can help those who don't have enough money saved up for a deposit or who don't earn enough to qualify for a traditional mortgage.

With guarantor mortgages, you can borrow up to 100% of the property's value and get access to competitive interest rates. However, it is important to remember that if you fail to make your payments, your guarantor will be liable and could face serious financial consequences as a result.

If you're considering getting a guarantor mortgage, it's important to do your research and compare different providers and interest rates before making any decisions. You should also read through all the terms and conditions carefully so that you understand what is expected of both you and your guarantor in order for this type of loan agreement to work.

Joint Borrower Sole Proprietor (JBSP)

A Joint Borrower Sole Proprietor (JBSP) mortgage is a type of mortgage that allows up to four people, including parents, to help buy a property. It can be the ideal solution for first-time buyers who may not have the financial capacity to get a mortgage on their own merit.

This type of mortgage is ideal for situations where parents or family members are willing to contribute to the purchase price but cannot take on legal responsibility for the loan. The person who takes out the loan is known as the sole proprietor and is responsible for making all payments and fulfilling all obligations associated with the loan.

However, other people can be added as joint borrowers who will also be responsible for making payments and meeting any other requirements associated with the loan.

In addition to helping you get approved for a larger loan amount, a JBSP mortgage can also help reduce your interest rate since it spreads out the risk among multiple parties. It's important to note that while this type of mortgage may be beneficial in some cases, it does come with certain risks such as putting your credit score at risk if one of the joint borrowers fails to make their payments on time.

Overall, a joint-borrower-sole-proprietor mortgage can be an effective way for parents or family members to help you buy a home without taking on legal responsibility for the loan. However, it's important to understand all of the risks involved before entering into such an arrangement.

Family Springboard Mortgage (Deposit Boost)

Family Springboard Mortgage, also known as Deposit Boost, is a type of mortgage available in the UK that allows first-time home buyers to purchase a property with little or no deposit. This is possible because the borrower's family member provides financial security for the loan, either through savings or their own property.

The Family Springboard Mortgage is offered by a few different lenders in the UK. Typically, the family member provides 10% of the property's value as a deposit boost, and this is held in a separate savings account. The borrower then takes out a mortgage for the remaining 90% of the property's value.

After a set number of years once equity has built in the property, the savings account is returned to the family member, subject to the mortgage repayments being up to date.

Overall, the Family Springboard Mortgage is an excellent option for first-time buyers who may not have enough savings for a deposit, but who have family members who are willing to help.

Deposit Unlock

Deposit Unlock is a brand new scheme devised in collaboration with lenders and the home building industry in the UK. It enables first-time buyers and existing homeowners to purchase a new-build home with just a 5% deposit, while still being able to secure a 95% mortgage.

The scheme was developed by the Home Builders Federation and is supported by Nationwide Building Society, HomeOwners Alliance, Bellway, Barratt Homes, Taylor Wimpey, Zoopla and Linden Homes. It provides customers with an affordable low deposit mortgage solution that makes it easier for them to buy their dream home.

Keepmoat also offers Deposit Unlock as part of their home-buying scheme. This allows all types of buyers to purchase a brand-new home with just a 5% deposit.

Overall, Deposit Unlock is an excellent opportunity for those looking to buy a new-build property in the UK without having to save up for years in order to afford the large deposits usually required.

Homereach

Home Reach is a shared ownership scheme in the UK that allows people to purchase up to 75% of a home. The remaining 25% is paid for through rent, which can be as low as 2.75%. Home Reach works in partnership with national, regional and local housebuilders to make homes more affordable for buyers.

There are studios all the way up to 5-beds available in every region of England through the Home Reach scheme.

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Government’s Shared Ownership Scheme

Shared Ownership is a government-backed scheme that helps first-time buyers afford to get on the property ladder. Through part-buy/part-rent, buyers purchase a share of a property from a housing association, usually between 25% and 75%. The buyer pays rent on the remaining share and takes out a mortgage for the portion they own.

The scheme is designed to make it easier for those who can't afford the full deposit or mortgage payments on their own to enter the housing market. It also allows people to buy more expensive properties than they would otherwise be able to afford.

The eligibility criteria for Shared Ownership vary depending on where you live in the UK but typically include being a first-time buyer, having an annual household income of less than £80,000 and not owning any other property. You may also need to have lived in your local area for at least three years before applying.

Once you've been approved for Shared Ownership, you'll need to find an appropriate property and then apply for a mortgage with your lender. The amount you can borrow will depend on your income and credit history.

Shared Ownership is an excellent way for first-time buyers to get onto the property ladder without having to pay the full price upfront. However, it's important to consider all of the pros and cons before making any decisions as there are some drawbacks such as higher monthly payments due to rent and mortgage combined.

Wayhome

Wayhome is a UK-based company that offers an innovative solution for homeownership.

Through their Gradual Homeownership scheme, customers can buy a proportion of the home, at least 5%, and pay rent on the rest. This scheme makes it easier for people to become homeowners without having to take on large amounts of debt upfront.

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In summary, there are lots of options available for first-time buyers who need help getting onto the property ladder. From the government’s Shared Ownership Scheme to Wayhome and the Lifetime ISA, you can find the solution that works best for your individual circumstances. Each option has its own advantages and disadvantages so it’s important to consider all of them before making a decision.

Ultimately, with careful planning, dedication and financial discipline you can make your dream of owning a home a reality! At Teito, we’re here to help you make the right decisions. To learn more about how we can help you, get in touch with us today!

The Teito team is full of experienced and knowledgeable advisors who are on hand to provide tailored advice and guidance. Our team will take the time to understand your individual needs and provide you with a range of options that could work for you. We'll also discuss any risks associated with homeownership so that you're fully informed before making any decisions about which route is best for you.

So don't hesitate - get in touch with us today to find out more about the different ways we can help first-time buyers onto the property ladder! With Teito, owning a home is within your reach.