Large numbers of first-time buyers may be missing out on vital help to kick start their homeownership journey because they are confused about their options.
A survey by online mortgage broker, Trussle, found almost half of adults were unaware of schemes such as shared ownership and Help to Buy, which are available to enable people to purchase their first home.
While some 53% had heard of these schemes as many as 47% were completely unable to identify them.
In fact, nearly two thirds of people believed homeownership schemes were too complicated to get their heads around. Only 8% thought they were ‘too easy’ to understand.
Now Trussle has launched an online tool which allows potential homeowners to answer a series of questions to help them identify which schemes they may be eligible for.
Ishaan Malhi, CEO and founder of Trussle, said its research uncovered the ‘scale of misunderstanding’ around the existing housing schemes. The idea of the tool, he explained, was to help people try to navigate the schemes and find out which they would qualify for.
He also revealed Trussle would soon be introducing teams of brokers to manage mortgage applications for those people using these schemes.
He added: “If these schemes were simplified, prospective buyers would be more likely to understand the options available to them, more quickly.
“We want all first-time buyers to feel properly supported on their home ownership journey and maintain any momentum in today’s already tough market.”
Homeownership schemes at a glance
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The Help to Buy ISA
What is it?
This scheme, which offers first-time buyers a free savings ‘top up’ to help boost any potential deposit for a home, closes to new applicants on 30 November.
Did you know…?
It’s only available to first-time buyers – but just two in five (43%) are aware of this, and only 17% know that you can qualify from 16 years old8.
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Help to Buy Equity Loan
What is it?
As part of this scheme, would-be buyers only require a 5% cash deposit, with the Government offering (a time limited) interest-free loan worth up to 20% of the home’s price outside of London.
This means the would-be buyer needs just a 75% mortgage. To reflect London’s top-end property prices, the Government loans participants 40% of the home’s value interest-free for five years.
Did you know…?
Just under half the UK population know a 5% cash deposit is required, and crucially, fewer than a third are aware properties can cost as much as £600,000 in London, to reflect the capital’s higher property prices.
To date, more than 150,000 properties have been bought using this scheme. First-time buyers considering this scheme are warned they will start racking up interest on the equity loan debt after five years, at 1.75%.
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Shared Ownership
What is it?
This option sees would-be homeowners buying a stake in a Shared Ownership home while paying rent and service charge on the part they don’t own.
Did you know…?
For the Shared Ownership scheme, household income must be less than £90,000 within London and £80,000 outside of London. And yet, 68% of people think their household income must be less than £60,000 a year to qualify, regardless of location.
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