FirstBuy: You could be one of the 10,000 first-time buyers to get help

FirstBuy is the government plan to help first-time buyers get onto the property ladder through an equity loan. This week is the time to register your interest.

If you’re struggling to scrape together a deposit for your first home then you may be eligible for help to buy through the Government’s £250m FirstBuy scheme.

Under FirstBuy, the Government and housebuilders will offer about 10,000 first-time buyers a 20 per cent equity loan – 10 per cent each from the government and the developer – to be spent on buying an approved new build property.

The scheme begins in September and is open to first-time buyers around the country who have a five per cent deposit, a combined household income of under £60,000 a year and who can’t afford the 25 per cent deposit required in most cases to secure a mortgage the conventional way.
The equity loan will be interest free for five years, but there will be a 1.75 per cent annual fee introduced on the loan from the beginning of the sixth year to be repaid monthly. The equity loan itself will not need to be repaid until the home is sold.

Housing Minister Grant Shapps confirmed that over 100 housebuilders will take part in the scheme, which also has the backing of key lenders including Nationwide, Halifax, Barclays and The Melton Mowbray Building Society.

"With 80 per cent of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder,” Shapps said. "And because this help will be available on newly-built properties, it will also offer a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country."

Anyone interested in registering for the scheme should do so through the UK Government's HomeBuy website.

FirstBuy: What's the Government's new first-time buyer scheme all about?

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.