If you live in the United Kingdom and would like to get your foot on the first rung of the property ladder, there is good news for you. The good news comes from a new scheme set up by the government and house builders for British homebuyers. One of the biggest problems British families who wish to buy a home face is the lack of savings to pay for a down payment. They might have the monthly income to pay for a mortgage but not enough savings to pay for 10 to 20 percent of the house’s price as down payment. This is not only in a nuisance for families wishing to own their own house, it also slows down the recovery of the real estate sector, which needs all the eligible buyers it can get its hands on.

The UK government and house builders associations have teamed up to help families pay for a home’s down payment without increasing their risk of defaulting on monthly payments and having their homes repossessed. What are the terms of this program? How can you qualify? What will the down payment loan cost you? This two-article series will answer this and other questions you may have if you are in the market for a new home.

The program is called FirstBuy Scheme. It is available only to people who are to buy their first home. People who already own a home do not qualify for this program. So what does this program offer? FirstBuy offers first-time homebuyers a 20 per cent equity loan. What does that mean? A 20 per cent equity loan is a loan of 20 per cent the purchase price of the home secured by the property itself as collateral. For instance, if the home you wish to buy is worth 200,000 pounds and you qualify for FirstBuy, the scheme will grant you a home equity loan of 40,000 pounds. With most banks in the UK willing to offer 75 per cent mortgages to applicants with fair to good credit ratings, the 20 percent loan will help pay for most of the pending 25 percent first-time homebuyers had to cover themselves. Now first-time buyers under the FirstBuy scheme must only come up with the a 5 percent deposit.

The best part of the program is these loans do not have to be paid until (and if ) the homes are sold. This means your monthly housing payments will not increase one bit if you receive a FirstBuy equity loan. Only if you sell your home do you have to repay the equity loan and then you should have enough to pay from it from the equity you have built into your home through the years.

How can I register for FirstBuy? How much money has been set aside for this scheme? We will answer these and other questions on this program in the next article on this series on the FirstBuy scheme.

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