FIRST-TIME buyers are being given the chance to buy a house and not pay a mortgage for 10 months.
But buyers will want to know how it works, and if there are any catches - we explain what you need to know.
First-time buyers who reserve a new Persimmon home by January 31 can benefit from the company covering up to 10 of their monthly mortgage payments.
The move is intended to free up each customer’s cash to help with the cost of living.
The mortgage-free incentive is capped at 5% of the agreed sale price.
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For example, if your new home costs £245,000, Persimmon will pay up to £1,225 in your mortgage payments for 10 consecutive months.
This equates to an annual saving of £12,250.
The 5% discount is the maximum that a developer is allowed to contribute to a customer securing a mortgage - so if your house costs more than the average, it may not cover your whole monthly bill.
But be aware that the offer is available on selected developments and plots only.
The scheme is not open to those who purchase a property with a buy-to-let mortgage or those whose property was purchased using the First Homes Scheme or through a Discount Market Sale.
Sonia Da Costa, chief customer experience officer at Persimmon, said: "We know that the volatile mortgage market combined with the cost of living has left many families concerned about the affordability of a new home.
"The chance to move into a new home mortgage free for up to 10 months will give potential buyers some breathing space and ensure the path to a new Persimmon home provides real help with the cost of living."
Nick Morrey, technical director at mortgage broker Coreco said: " Anything that helps buyers with the cost of living is to be welcomed.
"It could save buyers thousands of pounds whilst heating bills and the cost of living are so high."
In a separate offer, the house-builder is supporting those selling their existing property with a 105% part-exchange.
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This allows customers to save money on fees and benefit from an extra 5% on top of their valuation.
If you’re eligible for part exchange, Persimmon will organise the sale of your existing home from start to finish for you.
It will agree on a fair and realistic price for your house based on independent valuations.
And once you’re happy with the part exchange offer the house-builder will appoint estate agents to market your property on our behalf.
Sellers can then reserve their new Persimmon home, safe in the knowledge that they have agreed a sale on their current property.
It comes as Persimmon announced that it saw 2% more home completions in 2022 compared to the previous year.
New home completions rose from 14,551 in 2021 to 14,868 in 2022.
A mortgage price war has also begun between lenders as fixed deals disappear faster than ever before.
Falling costs mean lenders are battling it out to offer borrowers cheaper fixed mortgage rates.
It comes as the lending sector continues to recover after the previous government's disastrous mini-Budget which caused mortgage rates to shoot up to a 14-year high in September.
Right now, both two and five-year fixed rates fell month-on-month for the second month running, down to 5.79% and 5.63% respectively - down from 6.01% and 5.8% respectively last month.
What other schemes are available?
Here are a few other first-time buyer schemes you can take advantage of.
Mortgage guarantee scheme
The mortgage guarantee scheme helps households with 5% deposits purchase their homes.
It enables buyers to take out a mortgage worth 95% loan to value (LTV), meaning only a 5% deposit is needed.
Under the scheme, the Government guarantees part of borrowers' home loans, reducing the risk on the loans.
It means that if the borrower is unable to pay one month, the state will pick up the bill - although it is highly likely there will still be repercussions for borrowers if this happens.
The scheme slashes the minimum amount first-time buyers need to purchase their first homes in half.
For example, a 10% deposit for a £300,00 home is £30,000 but under the programme, buyers would need just £15,000 for a deposit worth 5%.
The scheme runs for properties worth up to £600,000, which would see the minimum deposit required lowered from £60,000 to £30,000.
But while the scheme will help those struggling to scrape a deposit together, buyers will still need to earn a certain amount to be able to borrow a big enough mortgage.
Lenders will typically lend borrowers up to four or five times their salary.
So to buy a £600,000 house with a 5% deposit, you'd need to have a combined income of a minimum of £135,000 a year.
A major downside of these loans, however, is that the interest rates are often considerably higher than you’d pay with a higher LTV mortgage.
Shared ownership
Shared ownership lets first-time buyers purchase a portion of the equity in a property if they can't afford to take out a mortgage for the total value of the home.
You’ll co-own your home with a housing association, which will charge you rent on its portion of the property.
Buyers will find they'll likely need to buy a new-build home.
Buyers must purchase between 10% and 75% of the property to use the initiative, and they can then “staircase” - buy more shares in instalments - until they own 100% of it.
You can put down a deposit of just 5% using a shared ownership scheme.
While it can make buying a home more affordable, there are a few disadvantages.
You don't have as much freedom when it comes to selling up - if you own less than 100%, your housing association will get a set period of time to find a buyer.
That means you won’t be able to accept a higher offer from someone else.
Or, you might have to sell it back to the housing association instead of putting it on the market.
There are also fewer lenders offering shared ownership mortgages compared with standard ones.
This means there isn't much competition to offer decent rates.
Help to Build
The government last year unveiled its Help to Build scheme to first-time buyers.
It means you're able to build your own home with just a 5% deposit.
The government can give you an equity loan based on the estimated costs to buy the plot of land and build your home.
The loan amount can be between 5% to 20%, and up to 40% in London.
It will make building your own home more affordable, as previously, you needed a deposit worth around 25% of land and building costs.
With a home costing £400,000 to build, you would need to raise £100,000 typically. At 5% this would be just £20,000.
But there are some downsides.
Building costs can often run away - which means you could go over budget and end up forking out much more than you want to.
It could also be challenging to find land to buy and build on - including the faff of getting planning and a mortgage.
Companies offering loans with 5% deposits
There are companies offering loans to first-time buyers with just 5% deposits to help them boost their home budget
If you have saved up enough for a 5% deposit, you can apply for a home loan from Proportunity.
It works in a similar way to Help to Buy - but the key differences are that you can get a loan to cover up to 25% of the total value of a property, and it doesn’t have to be a new build.
You can repay your loan at any point - for example, you could choose to pay it back at all once when you sell up.
Ahauz is another company offering equity loans to buyers with a 5% deposit.
Again, you can get up to 25% of the property value up to £150,000.
