First Homes Scheme – An Insight

Are you a UK resident? Are you planning to buy your first-ever home? You might be super excited and nervous at the same time. After all, finding a nice house at an affordable price is a distant dream for many but there is good news! Launched in 2020, there is a first homes scheme of the UK government that allows you to buy your first home at a 30-50% price reduction from its market value. So, let’s learn about the first homes scheme and fulfill your dream.

Check Your Eligibility

To be eligible to buy a home under this scheme, you must be either 18 years old or older and must not have an annual income of over £80,000 before any tax deduction. However, if you are looking for a house in London, this increases by £10,000.  As a first-time buyer, you must also manage to secure a mortgage for at least half the price of the home.

Now, you may plan to buy your first home with others. In such a case also, you will be eligible for this scheme, but you all must be first-time buyers. Do not hesitate to apply for this scheme even if you fail to secure a mortgage. In such a case, you can apply together with others, but remember that the joint income of both of you must not be over £80,000 annually; before any tax deduction. Of course, if the house is in London, this annual joint income must not be over £90,000; before deductions of taxes.

How to Apply for This Scheme

The application process for this scheme involves a few simple steps.

• First of all, you have to contact the developer who had built that house. Now if you are buying the house through an estate agent, of that property, get in touch with him. Inform him about your intention to buy that house by the first home scheme.
• Next, you will get help to complete your application once they are convinced that you meet the eligibility criteria required for this scheme. However, your application will be incomplete if you fail to mention the name and contact details of your conveyance.
• Now, it is important to know that a small reservation fee will be required to buy a newly built house and if your application is rejected, the fee will be fully refunded. Your developer might offer you an incentive, but it should never exceed the fixed five percent of the discounted purchase price.
• The best thing is that you don’t have to worry about your application submission as it will be submitted by them to the local council.

Things that unfold post-application submission

Post application submission, the following steps should be taken:

• Now that your application for the first homes scheme is submitted, your application can be accepted or rejected. If accepted, start making efforts to secure a mortgage covering a minimum half of the purchase price of the home. You can also leverage your Lifetime ISA for the same.
• The next step will be to hire the conveyance and complete all the legal documents. Beware of fraudsters who pretend to be experienced conveyancers.
• Once you are done with your legal documents and have managed to secure a mortgage offer, your conveyance will seek permission from the local council to exchange contracts with the developer or estate agent. If it is granted, your next step would be to pay your deposit money because only after doing this step, you will become legally committed to purchasing your new home by availing of this scheme. Then you will know the decision of the local council i.e. your application is approved or rejected, but if approved, you will receive a certificate issued by the local council.
• Finally, on the completion date set by your developer or estate agent, the keys to your home will be handed over to you and you will be the proud owner of that home!

Remember that if you want to leave our home for someone as inheritance, that person must follow all the rules of the First Homes on lettings and in case of failure to follow the rules diligently, the house must be sold to someone who meets all the eligibility criteria of this First Homes Scheme.