Help to Buy ISA Alternatives For First Time Buyers

As the Help to Buy ISA scheme has ended, find out about the various other ways to get government support when buying a home.

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Home Help To Buy Isas Help To Buy ISA Alternatives For First Time Buyers
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: April 10, 2024

With the Help to Buy scheme closed, many prospective homeowners are left wondering what’s next for government support in buying a home. This shift prompts a closer look at the new initiatives set to replace Help to Buy, aiming to make homeownership accessible for first-time buyers and those struggling to step onto the property ladder.

This article dives into the upcoming programs designed to fill the void left by Help to Buy. We’ll explore how these new schemes compare, who stands to benefit, and the potential impact on the housing market, providing essential insights for those looking to navigate the post-Help to Buy landscape.

What is Help to Buy?

The Help to Buy scheme, introduced by the government in 2013, was designed to make homeownership more accessible for first-time buyers and those struggling to move up the property ladder.

It offered an equity loan up to 20% (40% in London) of the purchase price of a new-build home, allowing buyers to secure a property with as little as a 5% deposit and a 75% mortgage. This scheme aimed to reduce the financial burden on buyers and stimulate the housing market by encouraging the purchase of new homes.

When does Help to Buy end?

The Help to Buy scheme closed in October 2022 for new customers and ended for all customers on 31 March 2023. If your application has not already been approved, you won’t be eligible for the Help to Buy scheme as it is no longer available.

Why has Help to Buy ended?

No explanation has been offered by the government over why it ended the Help to Buy scheme. Nor does the government have any immediate plans to replace the scheme.

The Help to Buy scheme was introduced in 2013 to stimulate the housing market and make homeownership more achievable for first-time buyers during economic uncertainty and constrained mortgage lending.

Despite this, the scheme received criticism with a report by the House of Lords stating it resulted in house prices rising by more than the value of the loan. Help to Buy only applied to new builds, which led to criticism that it boosted housebuilders’ profits rather than tackling the problem of getting on the property ladder.

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Help to Buy Alternatives

The government is yet to announce a like-for-like replacement for the Help to Buy scheme. However, there are plenty of other alternatives you can choose from instead.

We’ve listed ten of the best below:

Mortgage Guarantee

The Mortgage Guarantee Scheme is designed to encourage lenders to offer mortgages to first-time buyers and current homeowners with only a 5% deposit, by providing a government guarantee on high loan-to-value loans.

This initiative aims to make it easier for individuals to secure a mortgage, even with a smaller deposit, by reducing the risk for lenders. It’s an opportunity for buyers to own their home outright, offering more flexibility and choice in the property market compared to shared ownership or equity loan schemes.

Shared Ownership

Shared Ownership allows purchasers to buy a portion of a property (usually between 25% and 75%) and pay rent on the remaining share. This scheme is particularly beneficial for those who cannot afford the mortgage on 100% of a home.

Buyers have the option to increase their share over time through a process known as “staircasing,” making it a flexible path to full homeownership. Shared Ownership properties are typically new builds or resales offered by housing associations.

First Homes Scheme

The First Homes Scheme offers newly built homes to local first-time buyers and key workers at a discount of at least 30% off the market price. This initiative aims to help people remain in their local areas rather than being priced out of the housing market.

The discount is locked in for the future to ensure the homes remain affordable for local communities.

Lifetime ISA

The Lifetime ISA is a savings product that allows individuals aged 18 to 39 to save up to £4,000 a year towards their first home or retirement, with the government adding a 25% bonus to savings.

The LISA offers a significant boost to savings, making it an attractive option for first-time buyers aiming to accumulate a larger deposit for their first home purchase.

Starter Home Scheme

The Starter Home Scheme focuses on providing first-time buyers under 40 with the opportunity to purchase a new build home at a minimum discount of 20% off the market price.

The scheme aims to make new build homes more affordable to younger buyers, facilitating easier access to the housing market.

Armed Forces Help to Buy

The Armed Forces Help to Buy scheme supports service personnel in purchasing their own homes. It allows them to borrow up to 50% of their salary, interest-free, to fund a deposit and other purchase-related costs.

This scheme acknowledges the unique challenges faced by military personnel in securing stable housing due to the nature of their work.

Deposit Unlock

Deposit Unlock is an initiative developed to enable first-time buyers and home movers to purchase a new build home with just a 5% deposit, without the need for mortgage indemnity insurance.

The scheme is backed by house builders and mortgage lenders, aimed at making new build homes more accessible to a wider range of buyers.

Professional Mortgages

Professional mortgages offer preferential rates and terms to qualified professionals, such as doctors, lawyers, and accountants.

These products recognize the stable income and career progression typical of certain professions, allowing for higher borrowing amounts and sometimes requiring smaller deposits.

Rent to Buy

Rent to Buy provides an opportunity to rent a new build home at a reduced rate for a set period, typically up to five years, to buy the home afterwards.

This scheme allows renters to save for a deposit while living in the home they wish to purchase, bridging the gap between renting and homeownership.

Right to Buy

Right to Buy enables council tenants in England to buy their home at a discount. The discount amount depends on the length of tenancy, the property type, and its value.

This scheme has facilitated homeownership for millions of council tenants, offering a substantial discount as an incentive for tenants to own their homes.

How a broker can help you decide on the best option

Even if you’re not ready to buy yet, it can be worth speaking to a mortgage broker about your options.

They’ll help in numerous ways:

  • Proving information. Your broker will know all the details of each government scheme and alternative product and can clearly explain the pros and cons to help you compare them.
  • Discussing the impact on your mortgage. It’s best to find out early on if the Help to Buy alternative you choose will limit your mortgage options. For example, less than 4 in 10 lenders provide mortgages for Shared Ownership buyers.
  • Making a recommendation. Even with all the information, it can be hard to decide for yourself which option to go for. After discussing your situation, your broker can recommend which solution is best suited to you.
  • Planning for the future. Your broker will help to see clearly where you are now financially, and where you need to be to buy a home.

While you’re still early in your home-buying journey, it’s not too soon to speak to a mortgage specialist. Seeking advice early on can set you off on the right foot and help you reach your goal faster.

We work with numerous brokers who are experts in Help to Buy, Lifetime ISAs and other alternative schemes. If you’d like to schedule a free, no-obligation chat about your options, give us a call on 0808 189 2301 or enquire online.

Speak to one of the advisors we work with to discover the Help to Buy alterantives you're eligible for

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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