Written by David Williams, Director & Head of Property
Buying a house is one of the most important financial decisions many of us make. With the cost of house purchasing being so high, it is important to consider if there are any options available to assist with the process.
Fortunately, there are several schemes available to help a buyer put their first foot on the property ownership ladder.
Lifetime Individual Savings Account (LISA). You can use a LISA to buy your first home provided the property costs £450,000.00 or less. Alternatively, you can just use it as savings scheme for later in life, although there is a penalty if you withdraw your funds before you are 60 or if you are not putting it towards the deposit of a house.
There is a minimum age requirement of 18 and maximum age of 39 in order to open a LISA. You will be able to invest up to £4,000.00 each year until you are 50. As stated above, the first payment must be before you are 40. Provided these criteria are met, the Government will add a 25% bonus to your savings, up to a maximum of £1,000.00 per year.
If you are purchasing with another first-time buyer who has a LISA, you can both use you LISA products to purchase the same property.
Help to Buy ISA. You can still use the funds in your Help to Buy ISA, provided you opened it prior to the end of November 2019 and if you but before December 2030. There is a limit of £200.00 per month on the amount you can invest but you will receive a 25% bonus on your savings.
Help to Buy: Mortgage Guarantee Scheme. Recently announced in 2021, the mortgage guarantee scheme assists buyers who only have a 5% deposit for the purchase of a house. The guarantee is a compensation scheme for lenders, covering them for losses in the event of repossession.
Shared Ownership. The Shared Ownership Scheme enables a buyer to purchase a share in a house from the landlord. The landlord will normally be a local authority or housing association. You then have a shared ownership lease where you pay rent on the portion you do not own.
You can still use a mortgage as the lender will take a mortgage on the share you purchase, usually between 25% and 75% of the property. Provided you comply with the terms of the lease during your ownership, you can purchase larger shares of the property (called “staircasing”), thereby reducing the amount you rent. You can staircase all the way up to 100% of the property until the lease is extinguished and you own the whole freehold.
Right to Buy/Right to Acquire. If you rent your home from a local authority, subject to qualifying factors, you can purchase your home from the council at a discounted price. You must have rented the property for at least 3 years to qualify.
Interestingly, these do not have to be consecutive years. Therefore, you still qualify if you have been in local authority accommodation for 2 years, ten rented privately, and then returned to local authority accommodation for a further year.
Residential Property Solicitors
If you are thinking of purchasing using any of the above schemes, please do not hesitate to contact our property team who will be able to guide you through the process on 01630 652405.
For more information about Onions & Davies’ conveyancing and residential property service, click here.