A lifeline for local first-time buyers and key workers
“The First Homes scheme caters exclusively to first-time buyers in England who are local residents, key workers or Armed Forces personnel.”
INTRODUCED IN 2021, First Homes is a government-backed scheme designed to help more first-time buyers onto the property ladder. Under the scheme, a firsttime buyer or key worker may be able to buy a newly built home for 30% to 50% less than its market value.
Buying your new build home with the First Homes scheme means you’ll have full ownership, and the reduced rates are applicable permanently. However, this scheme is only available on selected developments in line with local planning agreements.
UNDERSTANDING THE MECHANICS OF THE FIRST HOMES SCHEME To illustrate how the scheme works, consider a First Homes property with a market value of £200,000. If you are a local key worker, the scheme enables you to purchase it with a 30% discount of £60,000, bringing down your property purchase price to £140,000.
This significant reduction increases the burden of amassing a large deposit and lowers your mortgage repayments. However, when it’s time to sell, the 30% discount must be passed on to the next buyer from the local community who qualifies as a key worker or a first-time buyer.
ELIGIBILITY CRITERIA FOR THE FIRST HOMES SCHEME
The First Homes scheme caters exclusively to first-time buyers in England who are local residents, key workers or Armed Forces personnel. The definition of key workers encompasses a broad spectrum, including doctors, nurses, teachers, delivery drivers and supermarket staff. In addition to current Armed Forces members, the scheme accommodates divorced, separated or widowed spouses and veterans who apply within five years of leaving the forces. Local councils have the discretion to extend the definition of a key worker to include professions deemed essential in their area.
QUALIFYING FOR THE FIRST HOMES SCHEME
Potential buyers must satisfy several conditions to qualify for the First Homes scheme. First, they must be first-time buyers – individuals who have inherited or been gifted a home are not eligible. Second, their income should not exceed £80,000 (£90,000 in London), whether they’re purchasing alone or as a couple. Further, the property of interest must not cost more than £250,000 (£420,000 in London). Moreover, applicants must already live or work in the area where they wish to buy or have a local connection. Key workers are given priority in this scheme.
DEPOSITS AND MORTGAGES UNDER THE FIRST HOMES SCHEME
A minimum 5% deposit is typically required for first-time buyer mortgages. Hence, if your First Homes property costs £200,000, a 5% deposit would amount to £10,000. A First Homes mortgage will be necessary to facilitate purchases under this scheme. Several national and regional lenders provide 95% mortgages on properties purchased under this scheme.
>> TIME TO MAKE YOUR HOMEOWNERSHIP DREAM A REALITY? << If you require further information or need assistance navigating the intricacies of the First Homes scheme, don’t hesitate to get in touch. Our team of experts is ready to guide you every step of the way to make your homeownership dream a reality. Contact Omni Finance – telephone 01424 236903 – email simon.hickman@omnifinance.co.uk
The Mortgage & Property Magazine is published quarterly for Omni Finance by Goldmine Media Limited. All enquiries should be addressed to The Editor, The Mortgage & Property Magazine, c/o Goldmine Media Limited, 124 City Road, London EC1V 2NX. Please note that The Mortgage & Property Magazine does not accept unsolicited contributions. Editorial opinions expressed in this magazine are not necessarily those of Goldmine Media Limited and Omni Finance does not accept responsibility for the advertising content. Offers and promotions may have limited availability. To discover more, visit the Omni Finance website: www.omni-finance.co.uk. All Rights Reserved 2024. The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Due to the devolved administrations of the United Kingdom, the information relates to England only except where explicitly referred to otherwise. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. AS WITH ALL INSURANCE POLICIES, CONDITIONS AND EXCLUSIONS MAY APPLY. YOUR BUY-TO-LET PROPERTY MAY BE REPOSSESSED OR A RECEIVER OF RENT APPOINTED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE. MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY EXISTING MORTGAGE. ANY MONEY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT POTENTIAL INHERITANCE AND YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS BOTH NOW AND IN THE FUTURE.