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What is the First Homes scheme?
The First Homes scheme gives first time buyers a discount off the market price of a new home.
Please note this scheme is only available in England.
You can choose a new home built by a developer, or a home you buy from someone else who originally bought it as part of the scheme.
How does the First Homes scheme work?
Look for new homes advertised by developers under the First Homes scheme in your area. First time buyers can purchase these homes for 30% to 50% less than their market value.
The home cannot cost more than £420,000 in London, or £250,000 anywhere else in England, after the discount has been applied.
Who is eligible for the scheme?
You must be:
- 18 or older
- a first time buyer
- able to get a mortgage for at least half the price of the home
- buying the home as part of a household where total income is no more than £80,000 (or £90,000 if you live in London)
The local council may also set some eligibility conditions. For example, some councils may prioritise giving First Homes discounts to:
- essential workers
- people who already live in the area
- those on lower incomes
How does the process of buying through the First Homes scheme work?
Tell the developer or estate agent that you want to buy a First Home. They should then help you complete the application and submit it to the local council.
You might have to pay a fee if you want to buy a new build property.
Once the local council has confirmed you are eligible, you can apply for a mortgage.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Do you have a question?
What deposit is needed?
The minimum deposit required is 5% of the agreed purchase price – that’s the price after the discount has been applied.
A bigger deposit could be needed depending on your circumstances.
How much can I borrow?
Lenders undertake a thorough assessment of your income and expenditure in order to reach a figure. They factor in things like student loans, childcare, and maintenance payments as well as credit cards and personal loans.
Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible.
Can I rent my First Homes property out?
You’ll need to get permission from your mortgage lender first. This is known as consent to let. What’s more, you need to inform the local council, too.
The First Homes scheme states that you can usually let the property for no more than two years in total during the entire time you own it.
You may be able to let it out for longer in some circumstances, such as:
- the location of your job changes or you’ve been made redundant
- a relationship ends or if you’re moving away to escape domestic abuse
- you’re caring for a friend or relative
Your home in the future
Selling
You can only sell the property to someone who is eligible to buy a First Home.
You must also give them the same percentage discount that you got, based on the home’s market value at the time of sale. A RICS-registered surveyor has to value the property, and you have to tell the council you want to sell.
You can ask the council for permission to sell it at full market value to any buyer if:
- you’ve tried unsuccessfully to sell it as a First Home for six months or more, or
- selling it as a First Home will cause you severe difficulties, such as bankruptcy
The council can agree to let you sell on the open market, offer to buy the home from you at the discounted price, or ask you to continue trying to sell for a further six months.
If you sell at open market value, you need to give the council the same percentage of the sale price as the percentage taken off when you bought your home. For example, if you bought with a 30% discount, when you sell you need to return 30% of the sale price.
Remortgaging
Alternatively, you can remortgage your First Home.
The remortgage must be based on the value of the home less the discount you received when you bought it. For example, you would be able to take out a maximum mortgage worth 70% of the home’s value if you purchased it at a 30% discount.
Chat with our expert advisor
Pros and cons of the First Homes scheme
Pros
- You can buy a house for less money – the discount means a smaller deposit and smaller mortgage is needed
- There may be less competition due to strict criteria
- It gets you on the ladder if you can’t afford a property at full market value
- You may be able to buy in your local area, instead of being forced to look elsewhere for a property you can afford
Cons
- Limited availability of houses
- Limited number of banks willing to lend on this scheme
- Strict criteria means you may not qualify
How can The Mortgage Store Chorley help with the First Homes scheme?
Ready to buy your first home? Let The Mortgage Store Chorley help you out with the First Homes scheme!
We know all about this initiative and can make it easy for you. We’ll figure out if you qualify and find the best mortgage deals for you. Say goodbye to confusion and hello to your new home with us by your side. Get in touch now and start your journey to owning your own place!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE