First Home Scheme UK

First Home Scheme Uk is helping thousands of first-time buyers (FTBs) realize their dreams of homeownership. What is this scheme & how can it help other FTBs? First, let’s address these questions in detail. Before that, let’s discuss why new-age FTBs desperately need such government assistance schemes.

Many first-time homebuyers in the UK feel that the housing market is currently too volatile for them. Rocketing property prices, record-high inflation, & successive mortgage hikes are some of the key factors driving away aspiring homebuyers. However, some first-time buyers are addressing these challenges by taking advantage of the government’s First Home Scheme UK.

Major Challenges of New-Age FTBs

Rising Prices

Aspiring FTBs in the UK are facing the most challenging housing market in history. Since the pandemic, strong demand & limited supply have kept house prices high. This trend isn’t slowing down any time soon. According to the latest data from the property portal Zoopla – average property prices in the UK increased by 8.1% between September 2021 & 2022.

Rising Interest Rates

Over the next few months, falling buyer demand may slow down this price growth. But demand & supply aren’t the only two factors affecting house prices. Rising mortgage rates are the primary source of pressure on households’ finances.

In November 2022, the Bank of England raised interest rates to 3%. That’s the most significant base rate hike since 1989. These record-high interest rates will increase the average mortgage bills of over 5 million mortgage holders by £5,100 a year.

Special Challenges for Younger FTBs

Younger homeowners who are early into their mortgage terms will suffer the most. They’re more leveraged than previous generations of FTBs. Many bought houses when interest rates were at record low levels (e.g., 0.25%, as recently as January 2022).

Due to the extraordinary scale of the latest interest rate hikes, their monthly budgets will face massive shocks. According to the British think tank Resolution Foundation, these inflated monthly mortgage costs will drastically increase the average overall lifetime cost of FTB properties.

Over the next three years, these inflated monthly mortgage costs will increase the average overall lifetime cost of an FTB property to £318,000. That’s a record figure & more than double the lifetime cost of an FTB property acquired in 1974.

Mortgage advisors are financial professionals who assist customers in finding the best loan options for their specific situations. They also advise them on whether they qualify for a particular loan at all.

What is Mortgage

Several aspiring FTBs need help to raise deposits as well. According to Nationwide, a 10% deposit in the current market is more than 50% of a typical FTB’s annual income. FTBs with small deposits desperately need more accessible access to mortgages. That’s where the government’s first home scheme UK can significantly help.

What is First Home Scheme UK?

The First home scheme UK is a recent government initiative. Under this scheme, FTBs can avail discounts of at least 30% and up to 50% against the market value of the homes they’re acquiring. FTBs who earn less than £80,000 per annum (combined household income) can apply for discounts under this scheme. The properties on offer under this scheme cost less than £250,000.

• Only first-time buyers (FTBs) can apply
• Applicants must be 18+
• They must be able to secure a mortgage for at least 50% of the price of the home.
• Their annual household income shouldn’t be higher than £80,000 (£90,000 for scheme applicants in London)

Since June 2021, hundreds of “First Homes” properties have been sold under this scheme. Over the next two years, 1,500 more First Homes will roll out in over 100 locations.

How Does the First Home Scheme Work?

Many developers are putting out ads for new homes that are part of the First Homes scheme. Look for such ads & then contact the respective developer. They’ll help you fill in the application. Finally, you can send the application to your local council.

To maximize your chances of approval, contact a mortgage advisor. A professional mortgage advisor can help accelerate the approval process for your application. In addition, you’ll be eligible for a hefty discount on your first property purchase! If you want to discover more about what a mortgage advisor does and why you should hire one, please check our articles here.

Final Take: Use the First Home Scheme Now or Wait?

Many aspiring FTBs are delaying their acquisition plans, hoping house prices will fall further in 2023. However, interest rates are already at their highest levels since 2008. If borrowing keeps getting more expensive, your wait for lower house prices will come at the cost of affordable mortgages.

Waiting for a dramatic drop in house prices doesn’t make sense. Go for it if you need to buy a house and can afford it under the First Home Scheme UK. This is especially true if you plan to live in the house for many years. In the long run, the house will rise in value.

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