What can first time buyers expect from the mortgage market in 2023?

11 January 2023

What can first time buyers expect from the mortgage market in 2023?
The property market is dominating the headlines in the start to 2023. Whether it be interest rates, property prices or buying schemes, it can be overwhelming to understand what options there are for first time buyers in 2023. To help you understand your options, we have assembled this short guide.

Help to Buy came to an end in 2022

In a blow to first time buyers, the Help to Buy scheme came to an end in 2022. The scheme assisted first time buyers to get a property with just a 5% deposit, with up to 20% of the purchase price available as an interest-free loan for five years. Between the introduction of the scheme on 1 April 2013 and March 31st, 2022, the Help to Buy Equity Loan scheme was used to purchase 361,075 different homes across Britain.
Whilst there are no current direct replacements for Help to Buy, there are three schemes
available that might be of use to first time buyers.

Lifetime ISA

One government initiative available to help first time buyers is a Lifetime ISA. The scheme enables a first time buyer to save up to £4000 a year, which the Government will then add 25% of whatever is saved within the tax year. This means that you could receive an extra £1,000 a year for every year that the scheme is used. The money can only be used to fund your first home purchase, fund your retirement after the age of 60 or if you are terminally ill, otherwise you will lose the 25% bonus.

Shared Ownership

The Shared Ownership scheme is a government scheme that enables a prospective buyer to
purchase a share of the property from a housing association, and then pay rent on the rest.
Under the terms of the scheme, the buyer must purchase between 25% and 75% of the home’s
full market value to be eligible for shared ownership. The payment of rent and the mortgage is
proportional to the percentage of the property owned. Further shares of the home can be
purchased at a later date through a process called staircasing. This would reduce the rent owed
to the landlord.

First Homes Scheme

The First Homes Scheme was launched in June 2021, and is still in its early stages with very
few available developments eligible for the scheme. The programme allows first-time buyers,
local people and key workers to purchase the property at a discounted rate of between 30% to
50% of the market price. When the buyer decides to eventually sell the property, the discount is
passed along to the next buyer, so that they can benefit from affordable housing.

Whilst Help to Buy ending was a blow to first time buyers, there are still incentives available to
help first-time buyers to make their first steps onto the property ladder. If you would like to speak
to a mortgage specialist to understand how these schemes could benefit you, our friendly team
would love to help! Book an appointment to start your journey here.

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