What help is there for first-time buyers?

Can you get help as a first-time buyer?

Yes, if you’re a first-time buyer, you can often get help to buy your own home. It’ll come as no surprise that many first-time buyers receive help from family members to buy their first home. Over half of first-time buyers under 35 receive financial help from their parents. But as we’ll explain later, family support doesn’t have to come in the form of a cash gift. If your family is unable to help, there are also other options. Thanks to a number of government schemes, developer discounts and first-time buyer schemes, it may be possible to boost your mortgage affordability and even get a bigger mortgage without the Bank of Mum and Dad.  

Learn more: Best mortgages for first-time buyers

What help is there for first-time home buyers?

There is a lot of help available out there for first-time buyers, from schemes that help you increase your house deposit, to low-deposit options and ways to boost your borrowing potential. The difficulty is knowing what is out there, and what you're eligible for.

Let's run over the top 11 sources of help for first-time buyers. If you want to see which of these schemes you're eligible for, create a free Tembo plan for a personalised recommendation.

1. Lifetime ISA

One of the biggest hurdles first-time buyers face is saving up a deposit. High cost of living costs and rising rent make saving up for a house deposit - which is now over £50,000 on average - extremely difficult. It’s no wonder it takes 10 years on average to save one up! The Lifetime ISA is a tax-free savings account that gives you a free bonus of up to £1,000 each tax year towards your first home (or retirement). You can save up to £4,000 in your LISA each tax year and the government will boost your savings by 25% for free. So, if you max out your LISA for 5 years in a row, you’ll get a £5,000 top-up from the government, bringing your total deposit to £25,000.

Your savings could grow even faster if you choose a competitive LISA with a generous interest rate, such as the market-leading Tembo Cash Lifetime ISA offering 4.75% AR (variable)! 

You need to be aged between 18-39 to open a LISA, but once you’ve got your hands on one you can keep paying into it until the age of 50. 

2. Savings as Security

If your parents have money in savings and want to help you buy, a Savings as Security mortgage could allow you to get a mortgage without a house deposit of your own. Your family member will need to place 10% of the property’s value in a savings account with your mortgage lender. The money will be held in the account for 5 years and used as a security against your mortgage. As long as you make all your repayments during this period without any issues, your parent will get their money back (plus any accrued interest) at the end of the mortgage term. Everyone’s a winner!

3. Deposit Boost

If your parents don’t have cash savings but are homeowners, there is another way for them to help contribute to your deposit through a Deposit Boost. This involves unlocking money from your parents’ property and putting it towards your deposit. With a larger deposit, you access lower interest rates and make your monthly repayments more affordable. If you already have a deposit of your own, you could use a Deposit Boost to secure a more expensive property with an extra bedroom or a bigger garden! 

4. Income Boost

There is a way for your parents (or other loved ones) to help boost your borrowing capacity for a mortgage without giving you any money. An Income Boost involves adding your parent’s income (or a portion of it) to your mortgage application to boost your affordability. This can give you access to a bigger mortgage, as your borrowing potential will be based on your household income + theirs. This can help you get on the property ladder sooner if you can’t borrow as much as you need by yourself. 

Plus, although your parent will be named on the mortgage, they won’t be named on the property itself. Instead, they will play the role of the guarantor, meaning as long as you make your mortgage payments each month, they won’t need to step in to help. Down the line, say after you’ve had a pay rise, if you’re able to afford the mortgage by yourself you can then remortgage to take them off.

5. Low deposit mortgages

There are a number of schemes available to help first-time buyers buy their first home with only a small deposit saved up. These include new-build deposit schemes like Deposit Unlock, which allows you to purchase a new-build property from a participating home builder with just a 5% deposit saved up. There is also the government’s mortgage guarantee scheme, which also helps you purchase a property with just a 5% deposit (but it doesn’t have to be a new-build). This works by the government guaranteeing a percentage of the loan, which reduces the risk of financial loss to the lender if you were to stop paying off your mortgage. However, more and more lenders now offer 95% LTV (5% deposit) mortgages without using the mortgage guarantee scheme - so it is possible to get a low-deposit mortgage without it. There are also other first-time buyer schemes which allow you to buy with just a 5% deposit saved up, such as mortgages for professionals and key workers (more on this below).

If you have no deposit saved up, you could also get a mortgage for 100% of the purchase price through Skipton's Track Record mortgage. This allows you to use your track record of paying rent each month to evidence that you can afford a mortgage for 100% of the property’s price.

The thing to keep in mind with any of these schemes is that you still need to pass the lender’s affordability checks to ensure you can afford the mortgage repayments of a loan for 95% of the purchase price - regardless of whether you use the mortgage guarantee scheme or not. You also need to meet their eligibility criteria, which can vary from lender to lender, especially for specialist schemes. To see what mortgage products and first-time buyer schemes you’re eligible for, create a free Tembo plan today.

You might also like: Best 95% LTV (5% deposit) mortgages

6. Higher lending schemes

The other barrier to homeownership that first-time buyers face is getting a big enough mortgage loan. If you haven’t got family who could be your guarantor on an Income Boost mortgage, and you’re not eligible for Skipton’s 100% mortgage, you might be eligible for a 5.5x Income Mortgage. For those who earn over £37,000 (or £55,000 as a couple), you could borrow up to 5.5x your household income, significantly increasing the amount you can afford. If you have a professional role, such as a vet, solicitor, accountant, or lawyer, or a key worker role such as a doctor or nurse, you could also be eligible for a Professional mortgage, which also lets you borrow up to 5.5x your income. Often, both 5.5x Income Mortgages and Professional mortgages also only need you to put down the minimum 5% deposit.

Not everyone is eligible for these schemes, so it’s worth checking if you could be accepted before applying by creating a free Tembo plan.

6. Shared ownership 

Shared ownership is a part rent, part buy scheme that lets you buy a share of a property and pay rent on the rest. Most people buy between 25% and 75% of the property’s value to begin with, but some shared ownership schemes let you buy as little as 10%. You’ll then pay rent on the remaining share to a housing association or private provider. As you’re only purchasing a share of the property, you’ll need a much smaller deposit and mortgage than you would if you were buying a home the traditional way. If you’d like to own the property in full one day, you can ‘staircase’ your way to full ownership by buying more shares over time. 

But you’ll also need to factor the cost of rent into your budget too. In some cases, you might also have to pay service charges and ground rent, which could affect the affordability of your new home.  

7. Co-ownership

If you and your friends or siblings are looking to get on the ladder at the same time, but are struggling to afford a home by yourself, you could also consider buying together through Dynamic Ownership. This is a tenants-in-common style mortgage, where you and up to five others purchase a home together but own individual shares in the property. Your deposits and contributions over time are tracked, so if you put more in, this will be reflected in how much you own. This allows you to pool your savings together to afford a property while keeping it clear who owns what. Plus, with a larger combined income, you can afford to buy a more expensive home as your borrowing power will be greater. 

9. Forces Help to Buy

If you’re a serving member of the armed forces, you could get an interest-free loan of up to £25,000 from the government to buy your own home. Thanks to the Armed Forces Help to Buy Scheme, you can use the loan as a house deposit, to pay solicitor and estate agent fees, or in some cases renovate a property. 

You’ll need to have more than 6 months’ service history to qualify and will need to repay the government loan monthly. Mortgage lenders will take these interest-free interest-free repayments into account when assessing your affordability, so this could impact how much you can borrow. 

10. First Homes

The First Homes scheme could give you a 30% discount on a new build home, meaning you could buy a £300,000 property for just £210,000. You’ll need a much smaller deposit and mortgage than you would ordinarily, and your monthly repayments will be more manageable too. 

Local doctors, nurses, supermarket staff and other key workers are prioritised, but other first-time buyers may be eligible if they can find a suitable property in their area. 

11. Rent to Buy

With the Rent to Buy scheme, you can rent a new build home at a discount (usually around 20%) for a set time period, usually up to 5 years. This can make it easier for you to save for a deposit and get a mortgage. During that time, you’ll have the choice to buy the property you’re renting or to buy part of it under a Shared Ownership scheme. The scheme varies depending on where you are, so it’s worth checking how it works for your area.

You can read more about the Rent to Buy scheme here.