For those looking to buy their first property, this process can appear at first to be quite complicated. With confusing terminology and improper explanations of the various offers created for the purpose of helping those along with their first property purchase, it’s no wonder that a significant majority of prospective first-time buyers struggle to understand and further apply for many of the schemes that can help them in this process.
Therefore, in order to help simplify this often lengthy and complicated process, here are some main schemes set up to help first-time buyers, and the functions they serve in the process of buying a property.
This type of account can hold not only cash, but also stocks and shares, and can be paid into until an account holder reaches the age of 50, with the account allowed to stay open past this however no more payments can be made into it after this point. The savings within a Lifetime ISA account will also be kept tax-free as long as they are always kept within the account. When using the money in this account towards a first home, the typical withdrawal charge, 25% the amount withdrawn from the account, will not apply.
A Help to Buy equity loan is a type of low-interest loan the government can lend to, as the name suggests, help first-time buyers purchase their first property. The government can lend a maximum of 20% (40% for properties in London) for houses priced up to £600,000, provided that buyers have got a 5% deposit, the home is a new build and the buyer is not sub-letting or renting the property out. For the first five years, buyers will not have to pay fees for the equity loan, however past this point a fee of 1.75% the loan’s original value will be charged, and this will increase annually.
The Starter Homes Initiative is a scheme what is yet to launch, however when started this will allow first-time buyers to get a newly built home worth £450,000 by way of first charge, inside of London and £250,000 outside of London at a discounted price of 20%. Saving up for a deposit can be very difficult in the first place, especially for those fresh out of studying or early in a new job. The Lifetime ISA (individual savings account) is just one of the many offers available to help first-time buyers in the quest for their first property. This ISA is a tax-free savings account in which account holders can put up to £4000 a year into, in addition to the UK government giving holders a 25% bonus of this. In order to open up a Lifetime ISA, buyers must be between the ages of 18 and 40, and be either a UK resident, a Crown Servant or a spouse of a Crown Servant.