The FirstBuy scheme is the UK government’s latest effort to help low- to medium-income families who wish to buy their first home, but are unable (or find it difficult) to do so because they do not have the savings to pay the 25 per cent down payment most lenders require. For instance, a typical lender will gladly lend you (if you have a reasonably good credit rating) 75 per cent of your home’s value. However, most lenders require you to come up with 25 per cent by yourself, 5 per cent as a deposit, and 20 per cent as a down payment. Some lenders will not even let you pay for this with another loan for fear two loans will prove too much of a financial burden for your monthly budget. The FirstBuy scheme sidesteps these problems by providing a home equity loan of 20 percent of your home’s value (5 per cent you still have to find yourself). The beauty of this program is that it is paid as a partnership between the government and housebuilders and it does not have to be paid until you sell your home.

The fact the financial burden is shared by both the government and homebuilders is good news for taxpayers, and many builders are happy to pay their share if it allows them to unload empty new homes which have already been built. The second benefit of the loan—that it does not have to be repaid until you sell your home—solves the problem of increasing the financial burden on families who can’t afford a mortgage and a second home equity loan to pay for the down payment and deposit element of the home purchase.

The government has set aside 500 million pounds for this scheme and plans to reinvest the money repaid by homeowners that sell homes bought with FirstBuy equity loans. The scheme hopes to help over 10,000 first-time buyers take their first step onto the property ladder over the next two years. This program is set to start in September 2011, but you can already show your interest and start taking the necessary steps to qualify for a FirstBuy loan.

To register find a HomeBuy agent near to you and express your interest in the program. The agent will explain the requirements you need to meet and the documentation you must provide. For a list of HomeBuy agents by region click on this link.

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