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Overcoming Homebuying Challenges
For many aspiring homeowners, the journey to purchasing a property can be fraught with challenges, including saving for a deposit, securing a mortgage, and finding an affordable home. At Castle View Finance, we recognise these hurdles and are committed to providing valuable insights into government first-time buyer schemes to facilitate your entry into the property market.
Help to Buy: Mortgage Guarantee Scheme
Introduced by the government in April 2021, the Mortgage Guarantee scheme aims to bolster the availability of 5% deposit mortgages by offering lenders a government-backed guarantee. Under this scheme, lenders pay a fee for the guarantee, which provides partial compensation for any losses incurred in the event of repossession.
Key Points to Note:
- The scheme incentivises lenders to offer 95% loan-to-value (LTV) mortgages, enhancing accessibility for first-time buyers.
- Eligible properties, both new and existing, must be priced below £600,000, with criteria varying among lenders.
- While not all lenders participate in the scheme, consulting a reputable mortgage broker is essential to explore your options and secure the best deal.
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Help to Buy: Equity Loan (2021 – 2023)
While no longer available, the Help to Buy Equity Loan scheme (2021-2023) provided a lifeline for first-time buyers seeking to purchase a new home with a 5% deposit. Participants could obtain an equity loan from the government, covering up to 20% (or up to 40% in London) of the property’s value.
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Shared Ownership
Shared ownership offers a pathway to homeownership for eligible buyers by allowing them to purchase a share (typically 25%-75%) of a property and pay rent on the remaining portion to the housing association or developer. This arrangement makes buying more affordable, with the flexibility to increase ownership over time.
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First Homes Scheme
Launched in June 2021, the First Homes scheme extends a 30% discount to first-time buyers purchasing new properties. Eligibility criteria, including income thresholds and priority considerations, are determined by local authorities.
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Help to Build
Designed for self and custom builders, the Help to Build scheme facilitates access to lower deposit mortgages and government-backed loans upon project completion, akin to the Help to Buy: Equity Loan scheme.
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Lifetime ISA (LISA)
A LISA incentivises saving for a first home or retirement by offering a 25% government bonus on annual contributions up to £4,000. This tax-efficient account empowers individuals to accelerate their journey towards homeownership.
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Rent to Buy
Under the Rent to Buy scheme, renters can lease newly built properties with the option to purchase in the future, providing a pathway to homeownership while renting.
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Right to Buy
Council tenants may exercise their Right to Buy, enabling them to purchase their home at a discounted price, subject to eligibility criteria based on residency and property type.
Considering Other Options?
Explore alternative routes to homeownership, including 100% mortgages, financial assistance from family ‘The Bank of Mum and Dad’, and innovative mortgage products tailored to first-time buyers’ needs.
Contact us