Is the First Homes scheme a good way to get on the property ladder?
Dear Gareth,  A few weeks ago, I saw that the Government launched a new scheme to help first-time buyers on to the market. I want to buy my first house, but Im so confused about all of the options. Name and address supplied  Gareth says  Youre right  the First Homes scheme joins a patchwork of initiatives designed to help first-time buyers on to the property ladder, along with shared ownership, starter homes, right to buy and Help to Buy, not to mention the new 95 per cent mortgage scheme. I can see why youre a bit confused. Get financial advice and industry news, to you help manage your money Email address is invalid Thank you for subscribing! Sorry, there was a problem with your subscription. The intention, so the Government says, of the First Homes scheme is to give access to new-build properties to first-time buyers at a discount, providing a route for first-time buyers to stay in their local areas, rather than being forced out due to rising prices. Its only available in England, and first-time buyers can buy a property with a 30 per cent discount to the market value, with prices capped at 250,000 around the country, and 420,000 in London. You cannot own, or have an interest in, a property in order to qualify for the scheme and there are limits on your household earnings  if your household earns more than 80,000 a year (or 90,000 in London), you wont qualify for the scheme. This isnt open to people with large deposits either  youll need to get a mortgage worth at least 50 per cent of the value of the property. The scheme is open to anyone who meets the financial criteria, but local authorities have been given discretion to prioritise particular groups  be it by profession (key workers, for example) or people who already live in the area. Councils can add these requirements for the first three months that a property is on sale, after which it becomes available to anyone. Contact your local authority to find out about developments that are offering properties under the discounted scheme. Some authorities may offer discounts larger than 30 per cent  they have the power to increase the discount to up to 50 per cent, but they will need to show evidence why a bigger discount is required. The challenge at the moment is finding a property  only 1,500 are expected to be available in 2021, with a further 10,000 a year from 2022. The discount remains on the property when you want to sell. So if you buy with a 30 per cent discount, it will be sold at a 30 per cent discount on the sale price, which means that you dont benefit from the full upswing of any growth. For example, if you bought a property with a market value of 200,000 for 140,000, and its market value five years later was 250,000, you would receive 175,000  35,000 of the total 50,000 growth. And youll still sell at a discount even if the property has lost money. There are also a limited number of mortgage lenders committed to offering mortgages for the scheme. Halifax and Nationwide are on the scheme, which offer mortgages to people across the country. If you are a first-time buyer, I would suggest using a professional, regulated mortgage broker who can help you find the right mortgage and has access to deals that you cannot find on the high street.