First-Time Buyer Schemes: Alternative Ways to Get on the Property Ladder

Buying your first home can appear difficult, especially the trying to save for a deposit while also paying rent and bills etc part. A lot of people can afford monthly mortgage payments but struggle to save thousands of pounds upfront.

Many first-time buyers still have to rely on the bank of Mum and Dad (or Bank of Grandparents) to gift them some/all of a cash deposit to get on the property ladder. However, not every family has the funds to do this and so in this blog we will be taking a look at some of the alternative schemes available to help first-time buyers.

Lenders now offer different types of mortgages and schemes designed to help first-time buyers get onto the property ladder sooner. Some require little or no deposit, while others allow family members to help support the application.

Here are four popular options explained in a straightforward way.

100% Mortgages

A 100% mortgage allows you to buy a home without needing a deposit. This means the lender gives you the full amount needed to buy the property.

This can be useful for people who have astable income and good credit history but cannot save for a deposit because of high rent and living costs.

However, these mortgages usually have higher monthly payments and higher interest rates. There is also more risk if house prices fall, so buyers should make sure they can comfortably afford there payments.

Guarantor Mortgages

With a guarantor mortgage, a parent or family member agrees to help support your mortgage application. If you are unable to make payments, the guarantor becomes responsible for helping cover them.

This can help first-time buyers borrow more money or improve their chances of getting approved for a mortgage.

Guarantor mortgages can be very helpful, but it is important that both the buyer and guarantor fully understand the financial responsibility involved.

Joint Borrower Sole Proprietor (JBSP) Mortgages

A JBSP mortgage allows family members, usually parents, to help with the mortgage using their income while the property stays in the buyer’s name only.

This can help buyers who earn enough to afford repayments but do not meet the lender’s affordability rules on their own.

Many people like this option because it allows parents to help without being owners of the property.

Family Springboard Mortgages

A springboard mortgage allows parents or family members to use their savings to support the buyer instead of giving money away as a deposit.

The savings are placed into a special account linked to the mortgage for a few years. If the buyer keeps up with repayments, the money is returned to the family member, usually with interest.

This can be a good way for families to help someone buy their first home while keeping ownership of their savings.

Final Thoughts

Getting onto the property ladder is not easy, but there are now more options available for first-time buyers than ever before. Whether through a 100% mortgage or support from family members, these schemes can help make buying a home possible sooner.

Before choosing any mortgage, it’s important to make sure the monthly payments are affordable and that you fully understand how the scheme works. Speaking with a mortgage broker, such as ourselves, can help you find the right option and guide you through the process with confidence.