And just like that, summer is over, in it’s official sense anyway.
With the first day of spring comes a lot of movement in interest rates with many lenders passing on the cash rate reduction announced by the RBA recently. You’ll note in the tables below that several lender are yet to reduce their rates, but we expect by this time next week they will have followed suit.
We were pondering the various state and federal first home buyer incentives and schemes on offer during the week, and it got us wondering what was being offered in other countries. The UK has a range of programs to help first home buyers, but one in particular piqued our interest and we think it might be if interest to you.
Read on to find out more.
The scheme aims to make homeownership more accessible by offering newly built properties at a minimum 30% discount compared to market value. In some areas where housing is particularly expensive, local councils may increase the discount to 40% or even 50%.
Who is Eligible?
To qualify for the First Homes Scheme, you must:
- Be a first-time buyer (never owned a home before)
- Have a household income of £80,000 or less (£90,000 or less in London)
- Use the home as your main residence
- Meet any additional local council criteria, such as working in the area or being a key worker (e.g., NHS staff, teachers, emergency service workers)
How Does the Scheme Work?
Find a First Homes Property
First Homes properties are available in new housing developments across England. Developers must set aside a percentage of homes under the scheme.
Apply Through the Developer
Once you find a suitable property, you need to apply directly with the housing developer. They will assess your eligibility and help you with the application process.
Get Mortgage Approval
You must secure a mortgage from a lender that supports the scheme. The loan should cover at least 50% of the home’s discounted price.
What Happens If You Sell?
When you sell your home in the future, the same discount percentage will apply to the next buyer, who also needs to be a first home buyer. For example, if you purchased your home at a 40% discount, you must sell it at a 40% discount based on its new market value to another first home buyer. This ensures affordability for future buyers.
The Issues
No scheme is perfect, and this one is no exception to that with several issues emerging.
Developer Reluctance: Builders often prefer traditional affordable housing options, viewing First Homes as less profitable and administratively complex.
Local Authority Challenges: Councils face difficulties integrating the scheme into existing housing strategies, potentially undermining efforts to meet local housing needs.
Market Impact: There’s concern that the scheme may inadvertently inflate property prices, further exacerbating housing affordability issues.
theguardian.com
So whilst the scheme has noble intentions, its practical implementation may not effectively address the housing challenges faced by many first-time buyers in the UK.
Conceptually we kind of like it, and wonder if a similar premise could work in Australia.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
