Do first-time buyers get discounts?

Do I get help as a first-time buyer?

Yes, if you’re a first-time buyer, you may get help to buy your own home. For many, this comes in the form of a gifted deposit from family members, but you may be able to boost your affordability and even borrow more money without your parents having to hand over thousands of pounds in cash. 

And if you don’t have help from family, that doesn’t automatically mean home ownership is out of reach either. Thanks to a number of innovative buying schemes and first-time buyer initiatives, you don’t always need the Bank of Mum and Dad to buy a house with a small deposit or even get a bigger mortgage.

Let’s take a look at the schemes you can use without family help first, and then move onto the ones that require a little help from your parents (or a generous rich auntie).

Can first-time buyers get a discount?

Yes, first-time buyers can sometimes get a discount when buying a home. With the First Homes scheme, for example, eligible first-time buyers in England can get a discount of at least 30% on the price of a new build home.

To qualify, your household income must be £80,000 or less (or £90,000 or less in London). You can use the scheme to buy a home priced up to £250,000 after the discount (or up to £420,000 in London).

Key workers are prioritised, so if you’re a doctor, nurse, teacher, delivery driver, supermarket worker or a member of the Armed Forces, you may have a better chance of securing a property. The scheme is open to all first-time buyers, but in areas with high demand, key workers usually get first dibs. You can find out more about this scheme in our guide here.

The First Homes scheme isn’t the only way to save money when buying a house for the first time. 

As a first-time buyer, you may also be able to use a Lifetime ISA (LISA) to save up a house deposit faster. A Lifetime ISA is a tax-free ISA savings account designed to help you buy your first home. You can save up to £4,000 per tax year, and the government will boost your savings by 25% — up to a maximum of £1,000 a year.

So if you save the full amount for five years, you get a £5,000 bonus from the government, giving you £25,000 in total, including your own contributions and the government’s. It’s up to you whether you max out your LISA in one go or make smaller contributions over time. And if you’re buying with a partner or friend who’s also a first-time buyer, you can both open a LISA, max out your annual allowance, and combine your bonuses. Plus, if you open a Cash Lifetime ISA with a competitive interest rate (like the Tembo Cash Lifetime ISA) you could boost your savings even further.

As a first time buyer, you may also benefit from Stamp Duty relief when buying your first home. Stamp Duty is the tax you pay the government when you purchase a property, but first-time buyers benefit from a higher threshold that this starts at. This mean you could save thousands of pounds on the cost of buying a property compared to a second-time buyer. If you’re buying with someone else, you’ll only get Stamp Duty relief if they’re a first-time buyer too. 

Find out more about Stamp Duty and what you’ll pay in our guide here.

Saving a deposit is one of the biggest obstacles standing between renters and homeownership, but you might not need to save as much as you think to buy your own place. That’s because there are a number of schemes designed to help first-time buyers get on the property ladder with just a small deposit.

The Deposit Unlock scheme, for example, lets you buy a new-build home from a participating developer with just a 5% deposit. There’s also the government’s Mortgage Guarantee Scheme, which lets you buy a home with a 5% deposit, whether you’re buying a new build or an older property. The government will guarantee part of the loan, reducing the risk for lenders and making them more willing to offer 95% mortgages. 

There are also many mortgage lenders now offer their own 5% deposit (95% loan-to-value) mortgages, without needing to use the Mortgage Guarantee scheme or Deposit Unlock.

In some cases, you might even be able to buy a home with no deposit at all and without family help. If you’re renting, you may be eligible for Skipton’s Track Record mortgage, for example, which lets you borrow 100% of a property’s value if you can prove that you’ve consistently paid rent on time. 

Through a shared ownership scheme, you can buy a share of a home and pay rent on the rest, meaning you can get your own place with a smaller deposit and mortgage than you would normally. 

Most buyers start by purchasing between 25% and 75% of the property’s value, though some schemes now let you buy as little as 10% upfront. You’ll then pay rent on the remaining share, which is owned by a housing association or private provider.

If you want to eventually own the home outright, you can do this through a process called ‘staircasing’, gradually buying more shares over time until you reach full ownership.

It’s important to factor in the ongoing costs, as not only will you need to factor in your mortgage and rent, you might also need to pay service charges and ground rent, especially if you purchase a flat or new-build.

Learn more: Is shared ownership worth it?

How do I know what schemes I’m eligible for?

However, the key thing to remember with all of these schemes is that you’ll still need to meet the lender’s eligibility criteria and pass their affordability checks. Lenders need to be confident that you can afford the monthly repayments on a 95% or 100% mortgage, regardless of which scheme (if any) you use. 

The good news is, there’s an easy way to see what first-time buyer schemes you’re eligible for without applying, or doing your own research. By creating a free Tembo plan online, our smart technology compares your eligibility to thousands of mortgages and buying schemes in seconds for free! 

Now let’s move on to your options if you do have family help, such as family-assisted mortgages (often called guarantor mortgages). 

If a financially comfortable family member wants to help you buy a home, they could use their savings to help you get on the ladder. With a Savings as a Security mortgage (also known as a springboard or family guarantor mortgage), your family member will deposit around 10% of the property value into a special savings account with your mortgage lender. 

The money will be held in this account for a set period, usually around five years. If you keep up with your mortgage payments, your family member will get their savings back (plus interest) at the end of the agreed period. If you fall behind on your repayments, your helper’s savings may be used to cover the shortfall.

If your parents own a home, they could potentially unlock money from within their property and use it to help with your deposit. This is called a Deposit Boost, and it lets them raise funds through a small mortgage secured against their home, the proceeds of which is then gifted to you. 

If you’re struggling to get a mortgage big enough for the home you want, you may want to consider an Income Boost mortgage. This involves adding a family member to your mortgage application as a guarantor. The lender will consider both your incomes together when deciding how much to lend you, potentially boosting your borrowing potential. And although your ‘booster’ will be named on the mortgage (and therefore jointly responsible for the repayments), they won’t be named on the property itself.

You might like: Can I get a mortgage 5 or 6 times my salary?

Do first-time buyers get lower rates?

First-time buyers don’t typically get lower mortgage rates than home movers. However, if you are eligible for a first-time buyer scheme which makes homeownership more accessible. Some mortgage lenders also offer specific mortgage deals tailored for first-time buyers, which can offer competitive rates. However, specialist buying schemes can come with higher rates than those offered on standard residential mortgages.

The easiest way to access lower mortgage rates is to improve your affordability, for example by putting down a larger deposit. Seeking expert advice from a trusted mortgage broker can help you find the best mortgage deal for you from across the market, and help you work out how you could access better rates.