Struggling to save a deposit for your first London home?

You may be eligible for the FirstBuy Scheme

Despite continuing doom and gloom surrounding the current uncertain economic future the housing market is showing tentative signs of recovery in certain parts of the country. Now is the time to take that first step onto the property market before prices bounce back locking the market out of reach.

House prices declined by 0.2% in December, but increased by 1% in 2011 as a whole

Whilst property prices are lower than they have been for most of the last decade they still represent enormous multiples of first time buyers salary. So it can seem unrealistic at times to consider purchasing a property.

Help may be at hand, as lenders and home builders are desperate to reinvigorate the housing market designing and promote innovative new products to attract buyers. Financial incentives are often offered, including payment of stamp duty or legal fees. Others attempt to ease the home buying process by offering help with the cost of moving. Some builders are even offering to buy existing properties at guaranteed market rates, with part exchange schemes, enabling purchasers to move into their new homes sooner and avoiding the pitfalls of involvement in a buying chain.

London sees strongest growth in 2011, but less regional variation in house prices compared with previous years

London is one of the most expensive areas of the country with house prices well above the national average. If you are a key worker in the capital you can access the key worker living programme launched by the government in 2004. This program aims to retain public sector workers in areas of England where the housing costs are high and by providing subsidised mortgagesit makes otherwise unrealistically expensive homes affordable to key workers on relatively low incomes. You can qualify for the scheme if you are a teacher, police officer, fire fighter, nurse, prison officer or similar and live in London, East Anglia or south-east England.

If your job does not qualify you for such favourable terms, then it’s worth looking for similar schemes. The First Buy scheme is a national program in collaboration with housing providers helping first time buyers move into a home with a deposit as little as 4%. The housing provider, in partnership with the government, agrees to lend the purchaser 20% of the value of the home they wish to buy. The purchaser then takes out a 76% mortgage with a 4% deposit. Despite this they still own 100% of their home, and either repay the loan in instalments or as a lump sum when they sell or transfer the property.

The First Buy loan is interest free for the first five years allowing the opportunity to repay it without incurring any interest. After that, a low interest fee is charged annually. In order to qualify, household income must be under £60,000 with savings already in place to cover the initial 4% deposit, stamp duty and solicitors fees. The scheme is available nationwide, but only through new build developers who have signed up to offer homebuyers a helping hand.

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