Financing Options for First Time Buyers in 2025

There are plenty of incentives currently in place for first time buyers hoping to take their first step on to the property ladder.

At Napthens we regularly act for purchasers who receive contributions towards their deposit, mainly from close family members. These contributions are usually treated as ‘gifts’ which the mortgage lender will need to approve.

Of course, not everyone has access to this type of assistance – but there are a number of ways in which would-be first time buyers can get further help.

Using a Mortgage Broker

As well as checking details of the mortgage offers your current bank has in place, it is also prudent to speak to an independent mortgage broker, one which has access to the whole of the market, to ensure you are aware of all of the options out there – and information on any new schemes which could assist.

Springboard Mortgage

For those family members or close friends who cannot afford to simply gift a sum of money towards the purchase of a property, they can contribute by way of a ‘springboard mortgage.’

This means that the purchaser does not have to find a deposit, but instead, the family member or friend can provide 10% of the property purchase price as security.

The money is paid into a separate account with the bank, and earns interest over a period of time.

Guarantor Mortgage

A guarantor mortgage is similar to the springboard mortgage in that it brings your family members or friends into the equation, but differs in that the guarantor’s savings aren’t tied up in the lender’s account. Instead, a guarantor mortgage is secured against other property or savings, meaning that they are liable for making payments should you fail to.

Government Assistance Schemes for First Time Buyers

Government affordable home ownership schemes have changed a great deal in recent years, with the end of Help to Buy in some areas of the UK, but other schemes available to first time buyers.

Help to Buy ISA

Help to Buy ISAs became closed to new applicants on 30th November 2019.

However, if you already own a Help to Buy ISA, you can continue saving up to £200 monthly into the account until November 2029, and claim the 25% government bonus until November 2030.

There is still a limit on purchase price of up to £250,000 (up to £450,000 in London only). It must also be the only home you own and you must intend to live there, not own as a second home, rent or sublet.

Lifetime ISA

Unlike Help to Buy ISAs, the Lifetime ISA (LISA) is still open and allows you to:

• Put in up to £4,000 each year until you turn 50 years of age (you must make your first payment before your 40th birthday); and
• Receive 25% bonus from the government up to £1,000 per year.

With a LISA, you can either hold cash, invest in stocks and shares, or hold both.

To buy your first home, the property:

• Must cost £450,000 or less;
• Be bought at least 12 months after the first LISA payment;
• Be acted upon by a conveyancer or solicitor;
• Be bought with a mortgage

If you are purchasing with someone else who has a LISA, you can combine your LISA amounts, including government top up.

However, if you don’t buy your first home with your LISA, you can withdraw when:

• Your turn 60; or
• You become terminally ill, with less than 12 months to live

If you claim your money outside of these areas of eligibility, you must pay a withdrawal charge of 25% to pay back the government’s top up.

Help to Buy Equity Loan

The Help to Buy equity loan is now only available in Wales, having been ended in England, but extended in Wales by 18 months until September 2026.

The government has made lots of information available to try to ensure there is no confusion regarding eligibility. For instance:

• In order to qualify for a help to buy equity loan, the property needs to be new build;
• Have a purchase price capped at £300,000 for Wales from a registered builder;
• Be the only property to be owned;
• Not be sublet or rented out after the property has been bought; and
• Not be your second home.

You are required to put down a minimum deposit of 5% on the new build, and must be able to fund 80% or more of the property purchase price with this deposit and the repayment mortgage.

Shared Ownership

As well as Help to Buy, shared ownership is an option, whereby you can purchase a 25 – 75% share of a property, with the Housing Association owning the rest. You would then arrange to pay rent on the share owned by the Housing Association.

These types of property are leasehold, and you will need to ensure that you are comfortable with the obligations set out in the lease.

Again, you will need to check your eligibility for this type of property, as there is criteria which you will need to meet.

First Homes Scheme (England Only)

This scheme allows a first time buyer to purchase a property for significantly less than its market value, 30-50% less according to the scheme’s official details.

The home can be either a new build or a home that is second hand but previously purchased via the scheme.

To be eligible, you must:

• Be a first time buyer
• Be 18 years or older in age
• Receive a mortgage offer of 50% or more of the purchase price of the property
• Have a salary of less than £80,000 (£90,000 for London) based on previous tax year
• Be purchasing alone or with other parties who are all first time buyers, in joint application. The £80,000 (£90,000 for London) salary limit still applies as a combined joint income of all parties based on previous tax year.

Rent to Buy Scheme (England Only)

If you live in England outside of London (which has its own London Living Rent scheme), you may be eligible to apply to rent a property for lower than its market rent via the government’s Rent to Buy scheme.

In this scheme, you typically pay 20% less for a rental property and put that saving into a deposit to use on your first time home purchase.

The scheme’s initial term is 2 years, to be extended subject to the landlord’s acceptance.

You are not obliged to purchase the property you are renting.

Importantly, Rent to Buy can be used in conjunction with other government schemes such as Lifetime ISAs (LISAs), allowing you to maximise your savings and government bonuses when you decide to purchase.

An added bonus of this scheme is that it can help build the credit score of the renter.

Note that Rent to Buy properties are typically leasehold.

How Can Napthens Help?

At Napthens we are experts in advising first time buyers in relation to any of the options mentioned above – and we are able to provide clear advice in connection with the purchase of leasehold properties.

Please be aware that any lawyer advising the first time buyer would not also be able to advise a family member or friend providing any financial assistance. In these situations, those individuals would need to take separate, independent legal advice if assistance is required. It is worth setting this up at the outset, in order to avoid any delays later on.

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Note that as SRA-regulated conveyancing solicitors, we are not an FCA-regulated financial adviser. We would would advise those seeking mortgage and other financial advice to consult a regulated advisor.