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Saving to Buy

Exciting Times for New Buyers

Buying a first property is one of the most exciting times of anyone’s life, with many new problems to be solved. The first of these is if you need a deposit, and how to raise the cash if you do.That’s assuming that the Bank of Mum and Dad is not available.

A deposit usually means around 10% of the purchase price of the property, although there are many ways to get help with the procedure. In the budget of 2015, the chancellor announced probably a welcome scheme for first-time buyers – the Help to Buy ISA. The initiative requires no minimum monthly deposit, and would-be buyers can put up to £200 a month into this special type of ISA, with the government will contribute a quarter of the amount, up to a maximum £12,000. This way, savers can get up to £3,000 towards the cost of their first property. There are no restrictions on how quickly or slowly they can save.

As property continue rising, it is becoming increasingly difficult for younger people to get on the property ladder. This is especially the case when factors such as student loans and the cost of living in cities (where the work is) are built in. The government is doing something really positive for first-time buyers by addressing the main initial stumbling block. The Help to Buy ISAs are restricted to first-time buyers. meaning that professional buy-to-let or development companies are unable to use the scheme.

There is also evidence of clear thinking by the government in the helpful structure of thie new type of ISA. To begin, the minimum deposit is only £1,000, which can be used for purchasing properties selling for a maximum of £250,000, although that figure rises to £450,000 in London.

Help to Buy Equity Loan

Another recent initiative by the government is the Help to Buy Equity Loan. Any prospective buyers who already have a deposit of 5% can apply for a loan from the government of up to 20% of the property price, to a maximum of £600,000. This is interest-free for as long as five years, and can be repaid either before or after the sale of the property.

Although a deposit is normally around 10%, there are ways to adjust this in the buyer’s favour. The new Help to Buy initiative provides a loan guarantee as well as an equity loan. Both of these schemes require just a deposit of 5%, and the chancellor guarantees the loan with either a bank or building society, so taking an interest-free (for five years) loan from the government, means that a deposit can be up to 25% of the property price.

Dont Forget To Budget For Conveyancing

There are other methods to raise the deposit, but this is ja great option for first-time buyers to be aware of. Buying a property will require the services of a conveyancer to complete the transaction,so our handy Conveyancing Calculator is an essential tool for choosing the best rated and recommended conveyancer.

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