Mortgages For First Time Buyers | What To Expect In 2022 | What Can You Borrow?

Hello and welcome back to our channel and podcast! My name is Gemma, and here at WIS, we talk about all things relating to money, mortgages, and positive money mindset.

On today’s episode of Let’s Talk Money and Mortgages, we have Iftaka (Ifthi) joining us — a trained accountant and mortgage broker with over 10 years of experience, and one of the founding directors here at WIS.

Today, we’ll discuss the different mortgage options available for first-time buyers in 2022.

1. What is the 5% Generation Buy Scheme?

Ifthi:

Introduced by the government late last year, this scheme is fully rolling out in 2022.

The government guarantees the bank up to 20%, while the buyer only needs a 5% deposit.

This guarantee makes banks more confident to lend to first-time buyers.

Gemma: This is a great scheme for first-time buyers, especially for those who may struggle to save a deposit.

2. What about 5% Deposit Mortgages outside the Government Scheme?

Ifthi:

Some banks not participating in the government scheme have also introduced 5% deposit mortgages for first-time buyers.

This provides additional options for buyers who might have missed out on the government-backed scheme.

3. Are there 5% Deposits for New Builds?

Ifthi:

A few banks now offer 5% deposit mortgages specifically for new builds.

Traditionally, new builds required 10–15% deposits, so this is a welcome development.

This is different from the Help-to-Buy Equity Loan Scheme.

Gemma: Help-to-Buy allows the government to contribute 20%, while you provide a minimum 5% deposit, and the bank lends the remaining 75%.

Ifthi:

Pros: Makes purchasing easier for first-time buyers.

Cons: The government owns part of the house, which must be paid off when selling.

4. What is the 5.5x Income Mortgage?

Ifthi:

Traditionally, first-time buyers could borrow 4.5–4.75x their income.

New schemes now allow 5.5x income, with a minimum income requirement.

Currently, two banks offer this, and more may join soon.

5. How do Parent-Assisted Mortgages Work?

Gemma: Is this the Joint Borrower Sole Proprietor (JBSP) scheme?

Ifthi:

Yes. It allows parents to help with borrowing capacity without being on the deed.

The mortgage uses their income for assessment, but the property is technically yours.

Useful for first-time buyers who can’t meet borrowing requirements on their own.

6. Are there Mortgages for Students?

Ifthi:

Yes, a new scheme for students helps them get on the property ladder, usually with parental support.

Still being rolled out and monitored for uptake.

7. What about Stamp Duty for First-Time Buyers?

Ifthi:

First-time buyers are exempt from stamp duty up to £300,000.

Previously, during the stamp duty holiday, it was up to £500,000, but for first-time buyers, the £300,000 limit remains.

This saves buyers thousands of pounds and gives more financial flexibility.

8. What are Green Mortgages?

Ifthi:

Green mortgages offer a discount for energy-efficient properties.

Properties rated A or B often qualify, sometimes C too.

Popular with environmentally conscious first-time buyers and new builds, which tend to be energy efficient.

9. What Mortgages are Available for Self-Employed Buyers?

Ifthi:

COVID impacted self-employed buyers due to furlough, government grants, and variable income.

Banks are now more confident, looking at latest accounts instead of older COVID-inflated income.

Expect more options in 2022.

10. What about Contractors and Day-Rate Workers?

Ifthi:

Contractors, especially inside IR35, previously faced challenges.

Banks are now introducing schemes, with more lenders comfortable offering mortgages for day-rate workers.

Options have improved dramatically over the past year.

11. What Mortgages are Available for Foreign Nationals?

Ifthi:

Some banks tightened criteria post-COVID, but routes still exist.

Students or individuals with 5+ years in the UK now have mortgage options.

More lenders are expected to join this space in 2022.

Final Notes

Gemma:

These points may not be applicable to everyone, so always speak to an advisor.

If you don’t have a broker, contact us at WIS — we’re happy to help.

Reminder: Mortgages are secured against your home. Failure to keep up repayments may result in repossession.