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What if I don’t have a big deposit?

Saving for a deposit is not easy, especially if you have one income, student debt or are paying rent already! Many lenders appreciate this and will accept gifted deposit from family members, or in some cases from other third parties. To help more people buy their first home, the Government has also introduced a number of different schemes.

Lifetime ISA

If you are over 18 and under 40, you can apply for a Lifetime ISA.

With a Lifetime ISA, you can earn a 25% bonus on your savings of up £4,000 per year until you’re 50.

So long as the house that you purchase is valued at under £450,000 you can then use the savings and bonus from your Lifetime ISA towards the purchase of your first home.

If there are two of you and you are purchasing together, you can also combine your savings and bonuses from both of your Lifetime ISAs.

You can find out more about the Lifetime ISA here.

Help to Buy Equity Loan

A Help to Buy Equity Loan is available that allows you to put down a 5% deposit on a new build home with a maximum purchase price which is set based on the area in which you live. The current thresholds are below.

Region                                                               Max. property purchase price

  • North East                                   £186,100
  • North West                                 £224,400
  • Yorkshire and the Humber     £228,100
  • East Midlands                            £261,900
  • West Midlands                          £255,600
  • East of England                         £407,400
  • London                                        £600,000
  • South East                                  £437,600
  • South West                                 £349,000

There are different Equity Loan schemes for England, Greater London, Wales and Scotland, and they all vary slightly. For more information please click here.

How does it work?

  • You still have to contribute a minimum of 5% of the purchase price of the property
  • The government will provide a loan of up to 20% of the cost of your new build home
  • You therefore require a mortgage to cover the remaining 75% of the property value
  • The Equity Loan is interest-free for the first five years and you don’t need to make any repayments on it during this time
  • If the value of your home goes up, the amount that you need to repay will be based on the new value of the property when you sell it and not the original amount that you borrowed. Equally, if the value of the property decreases then you’ll be liable to pay a % of the reduced value of the property at the point you sell it, or when you repay your Equity Loan

 

Help to Buy Equity Loan scheme will run until 2023.

Find out more about the Help to Buy Equity Loan here.

Shared Ownership

The Shared Ownership scheme lets you buy a share and pay rent on the rest if you can’t afford the mortgage on a home yourself.

This is ideal for anyone who might be struggling to save the money for a deposit, as you can put down a small deposit on the share you own.

How does it work?

Typically, again you will pay a deposit of 5% and you would get a mortgage on the share of the property that you buy (between 10-75%), making it easier for those who are trying to get a deposit together.

You could apply for Shared Ownership in England if:

  • You’re a first time buyer
  • You used to own a home previously but can no longer afford to buy one
  • Your household earns £80,000 a year or less (outside London)
  • Your household earns £90,000 a year or less (in London)
  • You’re already a shared owner and are now looking to move home

 

The Help to Buy Shared Ownership Scheme will end in 2026.

There are no Help to Buy schemes operating in Scotland currently, however there are similar schemes, the Open Market Shared Equity Scheme and New Supply Shared Equity Scheme. Both allowing a potential contribution of up to 40% of the value of your property from the Government. To find out more about what help is available, click here to speak to an adviser today.

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Because we play by the book we want to tell you that…

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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TMR Financial Solutions is a trading name of Your Expert Mortgage and Protection Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.

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