The government’s HomeBuy Direct scheme, providing up to 30 per cent of the purchase price of a new build property, has been enthusiastically taken up by first time buyers. “It is proving extremely popular,” says Paula Carter, regional sales manager for New Homes Housebuilder Taylor Wimpey.  “People are able to buy their own property when they didn’t think they’d be able to,” she added. Thanks to falls in the value of property of more than 20 per cent in some areas, many thousands of first time buyers have discovered that New Homes are once more within their budgets, particularly when government assistance is available. New Home Developers share some of the financial burden for HomeBuy Direct with the government, making the state funding go further.  It also helps to promote interest in new build homes, which has been missing in recent months. “Because there is a problem with new property not selling, it makes better use of resources for the government to encourage first-time buyers to purchase these empty new homes,” says Sue Cocking, head of affordable housing at UK estate agency Knight Frank.  “There’s a wider economic benefit.” Among the few disadvantages of affordable housing schemes, according to Cocking, is that there are so many of them and they can be confusing.  “At the last count there were nine initiatives being offered.  People have to get their heads round all these before making an informed choice, and it isn’t easy.” One of the schemes, MyChoice HomeBuy, has attracted criticism for having such limited funding that many hundreds of applicants were disappointed when it launched in spring this year.  It was set up to offer as much as 50 per cent of a new home purchase through a low interest loan, but very soon ran out of funding in many areas of the country.   “It feels like the government came up with a great idea and got the hopes of thousands of first-time buyers up, only to rip it out from under us,” says Paul Robson, who put down a £1,000 deposit with a housing association on a flat in Stevenage but soon discovered that the scheme had run out in the area. In some regions, the money was gone within just three weeks of its release in April 2009.  HomeBuy Direct, in contrast, received an extra £80 million injection from the government, above its original funding promise.   To qualify, an applicant’s household income must not be above £60,000 per annum: the funding comes from the Homes and Communities Agency, with buyers taking out a mortgage for at least 70 per cent of the purchase price, with the remainder topped up by the scheme.  Nothing is payable on the loan for the first five years, but interest of 1.75 per annum is collected after that.  You can make repayments of at least 10 per cent of the loan after 12 months of ownership. The scheme, and others like it, has helped to bring home ownership to many thousands of first-time buyers in the UK, including many key workers such as police and teachers, who were previously priced out of the market. Falls in property values, along with HomeBuy Direct and other schemes, have meant that key workers can now afford to purchase a first home in more than a fifth of the UK’s towns.  Just two years ago, the Halifax Building Society found that the figure was just three per cent.   Home ownership is now realistic for key workers in Scotland, Wales, the north-west of England and Yorkshire and the Humber, but remains out of reach for many in the south of England. “All the affordable towns are outside southern England,” says Martin Ellis, housing economist at Halifax, “which means that key public sector workers are still heavily constrained in the housing market in the south.”
Guide to mortgages for first-time buyers For most first-time buyers, getting a mortgage is the single biggest obstacle to becoming a home owner.   Here are some useful tips and definitions to help you decide what mortgage will be best for you. Guarantor first-time buyer mortgage – a product where a third party (such as your parents) guarantees to over the mortgage payments if you can’t. Cash-back first-time buyer mortgage – where you get a lump sum from your lender once you’ve bought the property to pay some costs such as stamp duty or moving expenses. First-time buyer mortgage based on parents’ borrowing ability – you are able to borrow more because your parents can show that they will help you with payments. Joint-first time buyer mortgage – where you borrow more through teaming up with a family member or friend, sharing the costs and having joint payment liabilities. Family offset first-time buyer mortgage – where the savings interest of your family is offset against your mortgage interest. Graduate and professional first-time buyer mortgage – you can borrow more if you can demonstrate that you will earn more in the course of your career. Shared ownership first-time buyer mortgage – you pay rent to a co-owner (such as a housing association) for part of a property and get a mortgage for the part you are buying. Renting a room first-time buyer mortgage – rental from a spare room is taken into account to calculate the amount that you can borrow. Rent to Buy first-time mortgage – the lender uses the amount that you’ve been paying in rent to calculate how much you can afford to pay on a mortgage. Shared equity first-time buyer mortgage – you get a mortgage and a top up loan to buy a home, but forfeit some of the increase in value of the property when you sell it (if it has risen in value).

This news item courtesy of Tailored Home.