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Lenders participating in the scheme must offer a five-year fixed-rate deal to borrowers, giving them peace of mind over their monthly interest repayments.įind out more: How to get your first mortgage The 95% mortgage scheme guarantees that lenders will be compensated for any losses they may incur if the home is repossessed and there is not enough money from the sale to repay the mortgage debt. Most lenders stopped offering 95% loan-to-value mortgages following the outbreak of the pandemic, amid fears that borrowers might overstretch themselves at a time of economic turmoil. The scheme was launched in April 2021 to encourage banks and building societies to lend money to people who cannot afford a big deposit. Halifax, Nationwide Building Society and Leeds Building Society are among lenders that have said they will offer mortgages for homes bought through the scheme.īuyers can use the government’s new 95% mortgage guarantee scheme to help them make a property purchase. Buyers will go through the standard property sales process and have access to conventional mortgage products. There is no separate lending scheme for First Homes.

Live in England (the scheme is not available in Scotland, Wales or Northern Ireland).Ī deposit of at least 5% is needed when applying for the First Homes Scheme.

Use a mortgage to fund at least 50% of the purchase price (so you can’t be a cash buyer).

Be able to pay a deposit of at least 5% of the discounted purchase price.

Have a household income of no more than £80,000 a year (£90,000 if applying in London).

Local authorities can use a “local connection” test to decide which people – perhaps nurses or teachers – should have priority for the new First Homes. The definition of a key worker will be determined locally and could be anyone who works in a job that is considered essential for the functioning of an area.

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This could include nurses, police officers, teachers, delivery drivers and supermarket staff, as well as serving members and veterans of the armed forces. The scheme is primarily aimed at key workers who provide an essential service. The First Homes scheme aims to make property more affordable to people on lower incomes, putting home ownership in reach. Average prices in the UK rose by 8.9% in the year to April, according to the latest official data from the Office for National Statistics. UK house prices have soared in the past year, despite the property market grinding to a halt in the early days of the coronavirus pandemic.

The First Homes scheme is designed for people who want to stay in the communities where they live or work, but are struggling to get on the housing ladder. The discounts will apply to the homes forever, meaning generations of local buyers will pay a reduced price.įind out more: Guide to buying your first home Who is the scheme for? The government aims to build 1m new homes by 2024.The developer or seller will handle the sale of the property, but will need the council’s approval to proceed with an eligible buyer.Local authorities will not choose individual buyers, but they will set the eligibility criteria.When the owner wants to sell, they must pass on the same discount applied when they bought the property.The price of a property cannot be above £250,000, or £420,000 in London, after the discount has been applied. Homes in the scheme are sold at a minimum discount of 30%, but local authorities can offer a discount of 40% or 50% for their area.The scheme is part of a wider pledge from the government to build 1m new homes by 2024. Local authorities are able to set higher discounts of either 40% or 50% at their discretion. The aim is to help first-time buyers get a foot on the property ladder through a discount of at least 30% of the typical market rate for the local area.

The First Homes scheme was launched by the government’s Housing Secretary, Robert Jenrick, in June 2021.