Government-backed savings schemes
Saving a house deposit is often cited as the number one reason stopping first-time buyers from stepping onto the property ladder so, to make this goal more achievable, the government has developed four schemes to aid and complement your saving efforts.
Whether you’re looking for a little help on saving for a mortgage, or open to buying your property in partnership with the government, the Help to Buy schemes are a great option, especially for first-time buyers.
All four schemes take into account London house prices, with higher thresholds for those looking to buy in the Capital. So, whether you’re looking for a little help saving for a mortgage, or are open to buying your property in partnership with the government, the Help to Buy schemes are a great option for first-time buyers.
The four options are Shared Ownership, Equity Loan, LISA, and ISA. We’ve put together a handy guide for each, to help you decide which is best for you.
Help to Buy: ISA
Help to Buy ISA accounts allow first-time buyers to save for their deposit quicker. Up to £200 can be saved each month, or £2,400 a year, and the government boosts the amount by 25%, tax free. The maximum bonus you can receive is £3,000, but to achieve that you need to save £12,000, effectively giving you a savings pot of £15,000, saved over 5 years.
Read more about Help to Buy ISAs
Help to Buy: Equity Loan
The Help to Buy Equity Loan is available for new build houses only. It allows a first-time buyer to contribute a minimum of 5% deposit and borrow up to 40% as a government loan (20% if buying outside of Greater London). The remaining amount is then made up by a mortgage loan (up to 55%). The loan from the government is then paid off alongside mortgage repayments.
Read more about Help to Buy Equity Loans
Help to Buy: Shared Ownership
Share Ownership is available for those who are not able to secure a mortgage for 100% of their home’s value. It offers buyers the opportunity to buy a share of the property (25%-75%), and pay rent to the government on the remaining portion.
Read more about Shared Ownership
Help to Buy: LISA
The newest of the government schemes, Lifetime ISAs (LISAs) also benefit from access to a 25% monthly bonus on top of your savings. The difference is that the maximum you can save is much higher (up to £4,000 a year). These ISAs differ from a standard type in that they’re designed to help savers purchase their first home, as well as save for later life.
Read more about LISAs
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