Help to Buy Scheme vs First Home Scheme, First Time Buyer ISAs, Stamp Duty & Tips

Read our guide for first time buyers, which covers financial support and other invaluable advice


Embarking on the journey to home ownership can be simultaneously exhilarating and overwhelming, especially for first-time buyers navigating the labyrinth of options in the housing market. Fear not, as this guide aims to illuminate the path ahead, offering invaluable insights and tips to empower you on your quest for the perfect abode. In the UK, aspiring homeowners are fortunate to have access to various government schemes tailored specifically for first-time buyers, including the First Home Scheme and Shared Ownership programmes, which can significantly ease the financial burden of purchasing your first home. Additionally, leveraging the benefits of First Time Buyers ISA accounts can prove instrumental in accumulating savings with the added boost of government contributions. However, beyond these schemes, there exists a myriad of considerations and strategies essential for first-time buyers to grasp. From understanding mortgage options and budgeting effectively to conducting thorough property inspections and navigating legalities, this article will equip you with the knowledge and confidence needed to embark on this exciting chapter of your life with clarity and assurance.

Help to Buy Scheme:

The Help to Buy Scheme is a government initiative in the United Kingdom aimed at assisting first-time buyers and existing homeowners in purchasing a property. It operates through two main components: the Equity Loan and the Mortgage Guarantee.

The Equity Loan scheme provides eligible buyers with a loan of up to 20% (40% in London) of the property’s value towards the purchase of a newly built home. This loan is interest-free for the first five years, making it easier for buyers to secure a mortgage with a lower deposit.

The Mortgage Guarantee scheme, on the other hand, enables buyers to purchase a home with a deposit as low as 5% by offering lenders a government-backed guarantee on mortgages with higher loan-to-value ratios. This reduces the risk for lenders, potentially opening up more mortgage options for buyers with smaller deposits.

First Home Scheme:

The “First Home Scheme” is a government initiative introduced in the United Kingdom to support first-time buyers in achieving homeownership. This scheme is designed to help individuals or households who may struggle to save for a deposit to purchase their first property.

Under the First Home Scheme, eligible buyers have the opportunity to purchase a home at a discount of at least 30% of the market value. This discount applies to new-build properties located in England and is available to local first-time buyers aged 23 or over.

To qualify for the scheme, applicants must have a combined household income of less than £80,000 (£90,000 in London) and be able to secure a mortgage. Additionally, they must have at least a 10% deposit saved to put towards the purchase.

The First Home Scheme aims to make homeownership more accessible and affordable for first-time buyers, particularly in areas where property prices may be prohibitive for many aspiring homeowners.

Help to Buy vs First Home Scheme:

There are some key differences between the Help to Buy and First Home initiatives, including the criteria for eligibility.

  • Help to Buy is open to both first time and existing home owners, with the purpose of assisting the purchase of a new build property. The main focus is to ease the burden of raising a deposit, with a government loan which is interest free for 5 years and government backing of your mortgage brokers agreement.
  • The First Home scheme is exclusive to first time buyers (who are 23 and older) and is designed to offer a discount of at least 30% off the overall market value of the property. In a similar fashion, this in turn reduces the deposit required.

In summary, while both the “Help to Buy” and “First Home” schemes aim to support first-time buyers in achieving home ownership, they differ in their eligibility criteria, benefits, and objectives. The “Help to Buy” scheme is a broader initiative aimed at making home ownership more accessible for a wider range of buyers, while the “First Home” scheme is a targeted initiative aimed specifically at local first-time buyers in England.

First Time Buyer ISAs:

First Time Buyer ISAs (Individual Savings Accounts) are specialised savings accounts tailored to assist individuals in saving towards their first home purchase in the United Kingdom. These accounts offer unique benefits aimed at accelerating the process of saving for a property deposit.

First Time Buyer ISAs function as tax-free savings accounts, meaning any interest earned on the savings is not subject to income tax. This feature allows savers to maximise their savings potential, as they can retain the entirety of their earnings.

Moreover, the government provides an additional incentive to savers by contributing a bonus towards the purchase of a home. For every £200 saved into the ISA, the government adds a £50 bonus, up to a maximum bonus of £3,000. This bonus is a significant boost for first-time buyers, effectively increasing their savings by 25%.

To be eligible for a First Time Buyer ISA, individuals must be 16 years old or over and be a resident of the UK. They must also be a first-time buyer, meaning they have never owned a property, whether in the UK or abroad. Additionally, there are limits on the amount that can be deposited into the ISA each month, typically capped at £200.

First Time Buyer ISAs provide a structured and incentivised approach to saving for a property deposit, offering tax benefits and government bonuses to help individuals achieve their homeownership aspirations more efficiently. These accounts have become a popular choice among first-time buyers seeking to maximise their savings while minimising their tax liabilities.

First Time Buyer Stamp Duty:

The “First Time Buyer Stamp Duty” refers to a specific stamp duty relief available to first-time buyers in the United Kingdom. Stamp duty land tax (SDLT) is a tax paid by property buyers in England and Northern Ireland when purchasing a property above a certain price threshold.

First-time buyers are eligible for a stamp duty exemption on properties valued below a certain threshold.  From 22nd November 2017, this threshold was set at £300,000. This means that first-time buyers are not required to pay stamp duty on properties valued below this amount.

Additionally, for properties valued between £300,000 and £500,000, first-time buyers receive a discounted rate of stamp duty, paying only a reduced percentage on the portion of the property price that falls within this range.

This stamp duty relief is designed to ease the financial burden on first-time buyers when purchasing their first property. It aims to make homeownership more accessible and affordable for individuals entering the property market for the first time. However, it’s important to note that eligibility criteria apply, and the rules and thresholds may vary over time, so it’s advisable to check the latest government guidelines or consult a tax professional for the most up-to-date information.

First Time Buyer Tips:

  1. Budget Wisely: Determine a realistic budget by assessing your income, expenses, and potential mortgage repayments. Factor in additional costs like legal fees, surveys, and moving expenses.
  2. Save for a Deposit: Start saving early for a deposit, aiming for at least 5-20% of the property’s value. Cutting back on non-essential spending and setting up a dedicated savings account can help accelerate your savings.
  3. Research the Market: Familiarise yourself with the local property market, including property prices, trends, and neighbourhood amenities. Attend open houses and view multiple properties to get a feel for what’s available.
  4. Get Mortgage Ready: Understand your borrowing capacity by obtaining a mortgage pre-approval. Compare mortgage options from different lenders to find the best deal suited to your financial circumstances.
  5. Consider Future Needs: Think long-term when choosing a property. Consider factors such as location, proximity to schools or work, and potential for resale value.
  6. Don’t Rush: Take your time and don’t feel pressured to rush into a decision. Buying a home is a significant investment, so ensure you’re fully informed and comfortable with your choice before proceeding.
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