Several government-backed schemes aim to give home buyers a helping hand onto the property ladder.
If you can use one of these schemes, lenders will still want to ensure you can afford to pay your mortgage.
Those with a small deposit, could be eligible to use the Help to buy scheme:
Equity Loan scheme: available to first-time buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have at least a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price.
The Help to Buy equity loan scheme will be extended until 2023. However, this extension will be restricted to first-time buyers purchasing newly built homes.
From 2021, there will also be new regional price caps which could reduce the maximum value of home that can be bought through the Equity Loan Scheme.
Cost of home – £200,000
Cost namePercentage of total£ valueYour deposit5%£10,000Equity loan20%£40,000Mortgage75%£150,000TOTAL£200,000