As mortgage rates rise for the first time in eight months, new analysis by Barratt Homes has revealed a widespread lack of awareness about government and developer-backed initiatives designed to make home ownership more affordable.
To better understand the challenges facing new buyers, Barratt analysed data from the Office for National Statistics (ONS) and conducted a survey of 2,000 UK homeowners to assess the nation’s awareness of available support schemes.
Challenges facing first-time buyers
When asked what they found most challenging when buying their first home:
- 27% said finding a home within budget was the biggest hurdle.
- 21% struggled most with understanding different mortgage options.
- 12% cited competing with other buyers, while 9% said saving for a deposit was the hardest part.
The research also found that 92% of first-time buyers rely on a mortgage to buy their property, yet only 12% said they used a purchase scheme to secure their home – highlighting a widespread lack of awareness of the support available.
Adrian MacDiarmid, Head of Mortgage Relations at Barratt Redrow, commented that:
“Affordability remains a big challenge for many people – not just first-time buyers but also growing families looking to trade up or people wanting a smaller home coming out of a relationship.
Our research found that not enough first-time buyers and their families are aware of schemes to help them – from the Government, new build developers, and lenders.
With some short-term uncertainty ahead of the budget in November, we have reviewed some of the best schemes to support buyers with a 5% deposit.”
Available support for first-time buyers
Adrian has also shared five schemes that can support first-time buyers onto the property ladder – as well as some that help those needing a step up to a bigger home.
1. Rezide Equity Loan
The new Rezide scheme helps buyers to purchase a new build home with a 5% deposit, whilst still accessing a competitive interest rate. The scheme is currently available on developments by Barratt Homes and Persimmon Homes.
Under the scheme, buyers put forward a 5% deposit and then access a 15% equity loan, which enables them to take out an 80% mortgage. Currently, lenders Barclays and TSB are supporting Rezide.
The equity loan has a fixed interest rate of 4%, which is payable when the mortgage is drawn down. This equity loan can be repaid early without any early redemption charges.
The scheme can offer better interest rates than a typical higher loan-to-value mortgage available on the open market.
2. Own New – Rate Reducer
Buyers could see mortgage interest rates at 2.2% or below with Own New – Rate Reducer, a scheme available on new build homes for up to the first five years.
The scheme could mean lower mortgage rates and reduced monthly payments, whether for a first-time buyer or an existing homeowner.
To view some of the properties available under the scheme and to see how much you could save on your initial mortgage payments, visit: https://www.ownnew.co.uk/#map
3. First Homes Scheme
First-time buyers in England could be eligible for the Government’s First Homes Scheme, which offers a discount between 30% and 50% on selected new build homes.
To qualify, buyers need to have a joint annual income of £80,000 or less (£90,000 in London).
They also need to meet the local eligibility criteria set by the local authority. This can include:
- Being a key worker, as defined by the council
- Having a local connection to people who already live in the area
- Having a lower joint annual income
4. Deposit Boost
The Deposit Boost scheme can increase a buyer’s deposit, resulting in them needing to borrow less from their lender whilst still being able to access competitive mortgage rates.
For buyers with a 5% deposit saved, Barratt Homes could boost it by funding up to an additional 5% of the sale price, giving them a 10% deposit in total.
With up to two-thirds of buyers relying on family money to help buy their first home, an alternative option is the Bank of Family scheme, where Barratt Homes will match their contribution up to 5% of the purchase price, up to £15,000.
5. Key Worker Deposit Contribution
Barratt Redrow’s three brands – Barratt Homes, David Wilson Homes and Redrow – have a Key Worker Deposit Scheme that celebrates the country’s millions of Key Workers, including teachers, nurses, council workers and foster carers.
As a thank you for the support provided to communities, Barratt Redrow offers key workers a contribution towards their deposit.
With the scheme, for every £20,000 spent on the purchase price of a home, a contribution of £1,000 will be made towards the deposit – up to £25,000.
For more information on the above offers, please visit the Barratt Homes website: https://www.barratthomes.co.uk/offers
