First Homes Scheme Pros, Cons and Costs

The scheme's headline benefit is a minimum 30 percent discount on a new build home. For many buyers, this is the difference between being able to buy and not. But the scheme also has meaningful restrictions, and the properties available are often limited in number. Understanding both the pros and the cons helps you decide whether this is the right route for you. A 30 percent discount on a 280,000 pound home saves you 84,000 pounds on the purchase price. This directly reduces how much you need to borrow, which in turn reduces your monthly mortgage payment. It also reduces the deposit required in cash terms. For buyers priced out of their local market at full prices, this makes homeownership achievable.

Purchase price reduced by at least 30 percent Monthly mortgage payment lower than on an equivalent full-price property Deposit in cash terms is lower than for the full market value Availability prioritised for key workers and local buyers in many areas

With the purchase price reduced, your deposit is calculated on a lower figure. A 10 percent deposit on a 210,000 pound First Homes property costs 21,000 pounds. The same deposit on a 300,000 pound open market property costs 30,000 pounds. The scheme does not fund your deposit, but it reduces the amount you need. Lenders who participate in the First Homes scheme lend against the discounted price. They do not take into account the full market value in their LTV calculation. You therefore only need a mortgage and deposit based on what you are actually paying.

Only available on designated First Homes properties, which are limited in supply You must sell at the same discount to another eligible buyer Benefiting from the full market uplift at resale is not possible Fewer mortgage lenders accept First Homes properties