The Government has pledged to spend £250 million through the new FirstBuy scheme to make it easier for first-time buyers to get on the property ladder. Here’s what you need to know
FirstBuy is a £250 million scheme announced in this year’s Budget to help first-time buyers get onto the property ladder. FirstBuy is expected to help about 16,275 first-time buyers via a shared equity scheme jointly funded by the Government and developers. It will only be available to those purchasing new build homes.
Who pays what?The Government and the developer will each contribute 10 per cent of the property cost leaving the prospective first-time buyer to contribute five per cent. This 25 per cent deposit will then enable the first-time buyer to secure mortgage funding on the remaining 75 per cent of the home.
When do the first-time buyers pay back to the equity loan?Under the FirstBuy scheme, the loan is interest-free for five years. But after six years, interest is charged at 1.75 per cent plus inflation, and plus one per cent after that. It’s understood the amount you pay back will stay at 20 per cent so participants will have to hand over 20 per cent of the market value of their home at the time of sale.
Who qualifies?FirstBuy will be available from September 2011 to first-time buyers that have an income of less than £60,000 and can’t afford the full deposit of 25 per cent needed to secure a mortgage.
Of the £250 million, the Government says £210 million will be available to families in England, while £40 million will go to first-time buyers in Wales, Northern Ireland and Scotland.
Is it enough?The average price for a first time buyer home is £153,601, according to FindaProperty.com, so the government’s £250m will help just an extra 16,275 of them onto the first rung of the property ladder. While it’s clear the scheme will improve the economic feel good factor, it’s still just a mildly larger version of the Labour government’s HomeBuy Direct scheme, which helped an extra 10,000 into home ownership. High prices and a difficult mortgage market mean there are at least 50,000 first time buyers being locked out of the housing market each year – so the new scheme really needs to be much more ambitious if it’s going to ease the first-time buyer crisis.
Who pays what?The Government and the developer will each contribute 10 per cent of the property cost leaving the prospective first-time buyer to contribute five per cent. This 25 per cent deposit will then enable the first-time buyer to secure mortgage funding on the remaining 75 per cent of the home.
When do the first-time buyers pay back to the equity loan?Under the FirstBuy scheme, the loan is interest-free for five years. But after six years, interest is charged at 1.75 per cent plus inflation, and plus one per cent after that. It’s understood the amount you pay back will stay at 20 per cent so participants will have to hand over 20 per cent of the market value of their home at the time of sale.
Who qualifies?FirstBuy will be available from September 2011 to first-time buyers that have an income of less than £60,000 and can’t afford the full deposit of 25 per cent needed to secure a mortgage.
Of the £250 million, the Government says £210 million will be available to families in England, while £40 million will go to first-time buyers in Wales, Northern Ireland and Scotland.
Is it enough?The average price for a first time buyer home is £153,601, according to FindaProperty.com, so the government’s £250m will help just an extra 16,275 of them onto the first rung of the property ladder. While it’s clear the scheme will improve the economic feel good factor, it’s still just a mildly larger version of the Labour government’s HomeBuy Direct scheme, which helped an extra 10,000 into home ownership. High prices and a difficult mortgage market mean there are at least 50,000 first time buyers being locked out of the housing market each year – so the new scheme really needs to be much more ambitious if it’s going to ease the first-time buyer crisis.
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