Schemes to help you save for a house

Finding it hard to get on the housing ladder? Help is at hand...

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Opening the door to home ownership

The costs of buying a home can sometimes be pretty daunting. As well as saving for your deposit, there are many other moving expenses to think about too.

If you’re finding it tough to put enough money away, don’t worry. There are still plenty of routes you can go down to make home ownership a little easier.

Help to Buy Equity Loan

From 1st April 2021 to the end of March 2023, the UK government will be running a new Help to Buy Equity Loan scheme for first-time buyers.

Under the scheme, you can buy a ‘Help to Buy’ house with just a 5% deposit. If you’re buying at the average UK house price (£275,000 in December 2021), that means you’ll only have to put down £13,750 up front.

The government will lend you up to 20% of the purchase price (40% in London), interest-free for five years. All that’s left is to arrange a mortgage for the remaining amount.

Just keep in mind that you’ll have to start paying interest on the equity loan from year six.

Note too that the scheme only applies to new homes built by Help to Buy-registered builders, and there’s a maximum property value for each region in the UK. 

Help to Buy Equity Loan - maximum property prices:

Region
Maximum property price
North East
£186,100
North West
£224,400
Yorkshire and the Humber
£228,100
East Midlands
£261,900
West Midlands
£255,600
East of England
£407,400
London
£600,000
South East
£437,600
South West
£349,000

Source: Helptobuy.gov.uk

95% Mortgage Guarantee Scheme

In April 2021, the government launched another scheme designed to help buyers with a 5% deposit. The 95% Mortgage Guarantee Scheme was introduced after 95% mortgages virtually disappeared from the market during the COVID-19 pandemic.

To give lenders confidence in these higher risk loans, the government guarantees the portion of the mortgage over 80%. In essence, that means they would partly compensate the lender if you failed to pay your mortgage.

The scheme is open to both first-time buyers and movers. It’s available on properties up to £600,000.

Help to Buy Shared Ownership Scheme

The government’s Help to Buy Shared Ownership scheme offers another route to owning your own home - or at least part of it. 

If you can’t quite afford the deposit or mortgage on 100% of a home, the scheme allows you to buy a share of one (between 25% and 75% of the home’s value). You then pay rent on the remaining share. Later down the line, you can buy a larger share if you can afford it.

The scheme isn’t available to everyone. Your household will need to be earning less than £80,000 a year if you live outside London, or less than £90,000 a year if you’re in London. 

There are also variations of the scheme designed to support older people, or those with disabilities.

Older People’s Shared Ownership

The Older People’s Shared Ownership scheme applies to those aged 55 or over. It works largely the same way as the main Shared Ownership Scheme, with one key difference.

In this scheme, you can only buy up to 75% of your home. But once you own 75%, you won’t have to pay rent on the remaining share.

You can find out more at helptobuy.gov.uk

Home Ownership for People with Long-Term Disabilities (HOLD)

Properties available through the Shared Ownership scheme may not always be suitable for people with disabilities. For example, you may need a ground-floor property, which may not be available on the standard scheme.

That’s why the HOLD scheme exists. It can help people with long-term disabilities buy any home (outside of the scheme) on a shared ownership basis.

Like the main shared ownership scheme, it is means tested. So your household must be earning less than £80,000 a year outside London, or less than £90,000 in London.

The Bank of Mum and Dad

It may not be an official scheme, but plenty of first-time buyers get a helping hand from their family. Whether it’s a generous gift or a ‘mates-rates’ loan, it can make a big difference to your ability to buy.

Sometimes, there’s even the option of a family mortgage, designed for parents to help their children onto the housing ladder.

If you do get some financial support from your family, just be clear with your mortgage lender as to whether the money has been gifted or lent. If you’re borrowing the money, the bank will need to factor in your ability to pay it back, alongside your mortgage repayments.

Remember, when you’re ready to discuss mortgages, Wesleyan Financial Services can help you find a great deal from a range of providers.

Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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