Help to Buy alternatives for first-time buyersHelp to Buy mortgage guarantee scheme closes soon

30 November 2016

First-time buyers

Over 175,000 people have used Help to Buy equity loans and mortgage guarantees

The Help to Buy mortgage guarantee scheme might be closing next month, but it's still possible to get a helping hand on to the property ladder. 

Between its launch in October 2013 and the end of June this year, 86,341 people bought a home using a Help to Buy mortgage guarantee, 79% of which were first-time buyers.

The scheme is set to close for applications at the end of December but its sister scheme, the popular Help to Buy equity loan, will continue to run.

While Help to Buy has had its share of success, it's by no means the only option for first-time buyers. Here are five other ways you could buy your first home.

  • Finding and applying for your first mortgage can be confusing. For expert advice on finding the best mortgage for you, call Which Mortgage Advisers on 0808 252 7987.

1. Use a shared ownership scheme

Shared ownership schemes allow you to buy a share of between 25% and 75% of a property and pay rent on the remainder.

The schemes are run by housing associations, and you'll need to have a household income of less than £80,000 (£90,000 in London) to apply. 

Shared ownership homes are leasehold, so you'll have to factor mortgage costs, rent and a monthly service charge into your calculations.

2. Get help from your parents

The 'bank of mum and dad' doesn't only refer to generous parents lending or gifting their children some or all of their deposit.

Guarantor mortgages, for example, allow parents to take on some of the lender's mortgage risk by guaranteeing to meet any repayments you fail to make.

Alternatively, joint mortgages enable you to buy the property together, although parents who already own a home could face a 3% stamp duty surcharge.

3. Buy a property with a friend

If you're struggling to afford a property on your own, you could consider buying one together with a friend or family member.

If you're thinking about joint ownership with a friend rather than a partner, it makes sense to buy the property as tenants in common, which will allow both parties to have a defined share.

Things can get tricky if one party wants to sell or needs to relocate, so you should always discuss this eventuality and draw up an agreement before jumping in to joint ownership. 

4. Consider saving a bigger deposit

While it's tempting to rush into buying your first property, it sometimes makes sense to save for a little longer.

There are a range of 95% mortgages available now but if you can build up a 10% deposit you should be able to access a bigger range of deals and you could get a better rate.

5. Wait for the Starter Homes Initiative

The government's Starter Homes Initiative isn't up and running yet, but with two new funds announced earlier this year to prepare potential development sites it seems some progress is being made. 

The initiative will offer 200,000 new-build homes priced up to £250,000 (£450,000 in London) to first-time buyers under the age of 40 at a discount of 20%.

We don't yet know where the homes will be built but we do know they'll be on 'brownfield' (formerly industrial) land. This will be offered without the usual planning costs in the hope of encouraging more developers to get involved.

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