Income caps would rule out over 22% of Mojo's London first-time buyer applicants
Mojo Mortgages says more than 13% of its first-time buyer applicants across the two years of its data would fall outside the proposed Your First Home caps.
Online broker Mojo Mortgages says more than 13% of the first-time buyers who applied through it in the two years of its data would be shut out of the government's planned Your First Home scheme by the reported household income caps. In London and Greater London, the share rises above 22%, according to the firm's customer data.
The scheme was announced on 26 September. It is expected to give buyers of new-build homes in England a 20% government equity loan, interest-free for an initial period, so they can buy with a 2.5% deposit. The government is due to publish the full terms in the Budget on 28 October.
The caps are reported at £90,000 for households outside London and £110,000 in the capital, but they have not been confirmed, so Mojo's figures rest on the proposals. According to Mojo, couples on two incomes in expensive areas are the buyers most likely to be caught by the limits.
John Fraser-Tucker, head of mortgages at Mojo Mortgages, said two average earners buying together "can easily cross these thresholds, effectively locking out working couples who are already squeezed by high property values."
A Censuswide survey of 1,000 UK first-time buyers carried out for Mojo in April found that 64% use side hustles, such as online reselling or freelance work, to save for a deposit. Of those surveyed, 53% said the extra money shortened their wait by two to three years, and 22% said they had stayed in a job they disliked to keep their income steady for a mortgage application. Mojo's data also shows about 26% of first-time buyers use deposits gifted by family.
Mojo said the equity loan would bring the main mortgage down to 77.5% loan-to-value, and that buyers would repay 20% of the home's future value. Until the Budget settles the caps and price limits, the firm said joint applicants should check whether their combined salaries would go over the ceiling.
