First Time Buyers – What Options are Available?

For many years, the rising cost of houses and the high percentage of the purchase price required for a deposit meant that buying property was out of reach for many prospective first time buyers.

Whilst house prices remain on an upward trend, there is good news in the form of the current help ‘. available from the government, who are keen to encourage ownership over renting.

Let’s look at some of the options for first time buyers…

Help to Buy

The government’s flagship Help to Buy scheme, launched in 2013, assisted in the purchase of 278,639 properties to June 2020. The total value of these equity loans was £16.46 billion, with the value of the properties sold under the scheme totalling £75.06 billion. Under this original scheme, 82% of the houses were purchased by first time buyers.

The re-launched Help to Buy 2021-23 is now open for new applications. Only available for first time buyers, the scheme has tighter stipulations – for example, there is now a cap on the price of homes that can be purchased. This stands at £224,400 in North West England.

Notwithstanding the Stamp Duty holiday, which is in place at a sliding scale up until the end of September 2021, first time buyers do not have to pay stamp duty on the first £300,000. So anyone using the scheme in the North West will not have any Stamp Duty to pay.

Whilst tighter eligibility criteria and restrictions on the value of properties that can be purchased may limit the suitability of the new loan scheme, the scheme will be a viable option for many first time buyers.   More information on the specifics of the new Help to Buy scheme can be found on our previous blog on the topic.

5% Deposit Mortgages

In the Spring 2021 budget, the government announced the return of 5% deposit mortgages in the form of a treasury-backed scheme. The guarantee is designed to encourage lenders to offer 95% loan-to-value mortgages to first time buyers, removing the often onerous need to save up to 20% as a deposit to secure a mortgage.

Available on houses with a value of up to £600,000, many mainstream lenders, such as high street banks, are now offering these products, making home ownership more achievable for many first-time buyers.

First time buyers are advised to seek independent advice in relation to mortgages as the rates of interest will vary from lender to lender and some banks are placing stipulations on the types of property that can be purchased. As with any mortgage, eligibility criteria will need to be met and affordability checks passed.

Other help

For those who are still some way off wanting or needing to purchase their first home, help in saving towards a deposit is available in the form of the Lifetime ISA (LISA). Eligible individuals can save up to £4000 per year, which is boosted by 25% by the government. The funds in the account can be saved and accessed in retirement, or withdrawn to assist with a first time property purchase.

A reported 1 in 10 property sales are now assisted by the ‘Bank of Mum and Dad’. First time buyers that are lucky enough to be offered assistance from relatives to fund a purchase will need to discuss the basis on which the money is being provided – ie. a gift, a loan, or as a joint purchase.

Buying a house for the first time can be a daunting prospect, but the team O’Donnell Solicitors are here to help. We work with a number of housebuilders across the North West and work with many first time buyers who are utilising help to Buy. For more information or advice on any of the above or to obtain a competitive quote for conveyancing, please get in touch.

Claire Egerton is Head of Residential Property at O’Donnell Solicitors.

For any further advice, please contact Claire on 01457 761320 or email