As a first-time buyer, it can often feel overwhelming when trying to save a deposit for your first home. Did you know there are government-backed savings plans to help you get there faster?
We have years of experience helping customers purchase properties using a variety of Government schemes.
If you’re thinking of getting on the property ladder and looking for some options to get there quicker, then read our helpful guide below!
Lifetime individual savings account (LISA)
You can put up to £4,000 each year into a LISA. The government will add a 25% bonus to your savings, up to a maximum of £1,000 a year! You must be 18 or over but under 40 to open a LISA.
If you’re buying with another first-time buyer who also has a LISA, you can both use your LISA towards the same property, doubling the government contribution. You can use a LISA to build your savings quickly for buying a home!
Visit https://www.gov.uk/lifetime-isa for further information.
Help to Buy scheme
Help to Buy can make purchasing your own home more affordable, and you can own a brand-new home sooner than you think! With Help to Buy, you only need a 5% deposit. The Government lends you up to 20% of the value of the property to make up the rest of your deposit. This not only allows you to put in a lower deposit upfront but also gives you access to lower interest rates. This is because your mortgage loan value is lower.
You do not have to pay interest for the first 5 years. In the sixth year, you’ll be charged interest at a rate of 1.75%. You have the option to pay back part or all your equity loan at any time.
You must repay your equity loans when you:
- Reach the end of the equity loan term (normally 25 years)
- Pay off your mortgage
- Sell your home
To use the scheme, you will need to purchase your home from a participating builder. The scheme is running until March 2023.
Visit https://www.helptobuyagent1.org.uk/ for further information.
Deposit Unlock scheme
The deposit unlock scheme is a relatively recent scheme that is only available for new build homes. First-time buyers and home movers can both use the Deposit Unlock to buy a new-build home with just a 5% deposit!
Lenders usually require a larger deposit to purchase new build homes, but the new scheme allows housebuilders to insure the mortgages, so a lower deposit is needed.
You can only buy a home from a house builder participating in Deposit Unlock and using a mortgage offered by a participating lender (currently Newcastle Building Society and Nationwide). These mortgages are only available through mortgage brokers like us.
We are proud to be the very first Mortgage Broker in the UK to arrange a deposit unlock scheme for one of our clients. So, you are in safe hands with us!
More information can be found here.https://www.hbf.co.uk/deposit-unlock/#:~:text=What%20is%20Deposit%20Unlock%3F,home%20with%20a%205%25%20deposit.
Shared Ownership scheme
You can buy a home through the shared ownership scheme if you cannot afford all the deposit and mortgage payments for a home that meets your needs.
You purchase a percentage of a home and then rent the rest from a housing provider. To use this scheme, you only need a 5% deposit of your share value, not the full property value! This could be half the deposit amount needed and help get you on the housing ladder much faster.
You can buy:
- a new-build home
- An existing home through a shared ownership resale scheme
- a home that meets your specific needs if you have a long-term disability.
Shared ownership homes are offered by housing associations, local councils, and other organisations. They are called ‘providers’ or the landlord.
You can buy more shares in your house in the future. This is known as ‘staircasing’. If you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the landlord’s share. You also have the option to purchase the whole share of your home in the future.
There are certain criteria you need to meet to use the scheme, which we can discuss further with you.
Visit https://www.gov.uk/shared-ownership-scheme for more information.
We hope these tips help you understand how you can get on the property ladder faster. It’s always helpful to speak to one of our expert advisors to see which scheme would be most suitable for your circumstances.