There are several government schemes available which provide help for First Time Buyers. The three main schemes for you to be aware of are:
A Lifetime Isa is a tax-free savings account with a difference. If you are saving towards a deposit for your first home, a Lifetime Isa can be an excellent way of boosting your savings which increases your deposit! You can save a maximum of £4,000 per year into your Lifetime Isa. The government will provide a bonus of 25% of the amount that you save.
For every £4 you save, the government will give you £1.
If you save the maximum permitted amount of £4,000 per year, you will receive a government bonus of £1,000 per year.
You can withdraw money from your ISA if you are:
You will pay a withdrawal charge if you withdraw cash or assets for any other reason (also known as making an unauthorised withdrawal). This recovers the government bonus you received on your original savings
You may have heard of Help to Buy Equity Loan and wondered what this means.
Those with a small deposit could be eligible to use the Help to buy scheme:
Equity Loan scheme: available to First Time Buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years providing you have at least a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price.
The Help to Buy equity loan scheme will be extended until 2023.
Shared Ownership is when you buy a share of a property from the landlord, usually from a housing association and the rent the remaining share. You will need a mortgage to pay for your share which can be between a quarter to three quarters of the property value.
You then pay a reduced rent on the share you do not own. Later, you can choose to buy a bigger share of the property, and continue to do this, until you own the full 100% of the property. This is called ‘Staircasing’.
Your mortgage broker will talk you through the above schemes to decide if they are right for you. But the best advice as a First Time Buyer specialist is to save, save and save some more!