Saving for your first home is tough. On average, you will need a deposit of around ten percent or more to give you access to the best mortgage rates.
We have looked at the available Government options and condensed them into bitesize sections to help you consider if any of their schemes can help you get on the property ladder.
Help to Buy ISA
In 2015 the Government introduced the Help to Buy ISA which offers a 25% bonus (up to a maximum of £3,000) towards the purchase of a first home. So, for every month you pay in £200, the Government will contribute an additional £50.
The Help to Buy: ISA is available from a range of banks, building societies and credit unions.
In April, the Government will also introduce the Lifetime ISA. This is aimed at helping younger adults to save flexibly for the long term. Savers aged between 18 and 40 will be given a 25% bonus on up to £4,000 of savings a year which means you will receive £1 for every £4 you pay into the ISA before the age of 50. Savings and the bonus can be put towards the purchase of a first home worth up to £450,000 anywhere in the UK, or withdrawn at the age of 60.
Help to Buy: Equity Loan
The Help to Buy equity loan scheme is available to first time buyers as well as existing homeowners looking to move. It works by reducing the deposit you pay to 5% and offers an interest-free loan (for the first five years) for a further 20% from the Government.
This scheme applies to new-build properties worth up to £600,000 only and is available to buyers until 2020.
If this is something you are interested in, look out for the Help to Buy logo on new-build developments and ask about the scheme there.
This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – take a look at their websites for more information.
Help to Save
The Help to Save initiative which is still set to launch in April 2018 will give lower-income savers who can set aside £50 a month, a tax-free bonus of up to £1,200. So how does it work? For those who qualify, a £600 bonus will be given at the end of two years, this is the equivalent of 50% of the amount saved.
Savers can continue to save for a further two years to receive an additional £600 bonus. In total, savers will be able to accumulate a pot of £3,600 under the scheme, £1,200 of which will have come from the Government.
The scheme is open to anyone who is in work and receives working tax credits or the universal credit and has household earnings equivalent to £6,365 for the year 2017.
Starter homes are targeted at first time buyers who would otherwise be priced out of the market. They are designed to let first-time buyers with an income of less than £80,000 (£90,000 for London) who are between the ages of 23 and 40, buy a new-build home with a 20% discount on the price.
A built-in provision requires these homes to be purchased with a mortgage that has a 15 year repayment period. Do be aware however, that if the property is sold within this time, some or all of the original discount will need to be repaid.
Councils in Plymouth, Bury, Stockport, Bridgwater, Cinderford, Minehead, Bristol, Trafford, Isle of Wight, South Ribble and Swindon have all qualified for the scheme and the starter homes should be available to purchase by 2018.
If you can’t quite afford the mortgage on 10% of a home, shared ownership gives you the chance to purchase a percentage of a property (between 25% and 75%) and pay rent on the remaining share.
Shared Ownership is available to first-time buyers, previous homeowners and existing shared owners on both newly built or existing homes.
If you are 55 or over you are eligible for and can get help from Older People’s Shared Ownership. This works in the same way as the Shared Ownership scheme, but you can only buy up to 75% of your home, however once you own 75% you won’t have to pay rent on the remaining share.
Right to Buy
If you are a council tenant in England and have been for at least three years, you may qualify for the Right to Buy scheme. Right to Buy helps council tenants buy their home at a discounted price, offering a maximum reduction of up to £77,900 or £103,900 if your live in London.
For more information on Right to Buy, take a look at the HM Government website