Current Saving Schemes to Help UK Home Buyers: A Guide to Boosting Your Deposit

The UK property market can be daunting, especially for first-time buyers who are looking to get onto the property ladder. One of the biggest obstacles for many is saving for a deposit. However, there are several government-backed savings schemes available to help make homeownership more accessible. In this blog, we’ll explore the current saving schemes available to UK buyers and how they can benefit you on your journey to buying your first home.

1. Lifetime ISA (LISA)

The Lifetime ISA is a flexible savings account that allows you to save up to £4,000 each year, with the government adding a 25% bonus (up to £1,000 per year). This makes it a very popular option for first-time buyers. The funds can be used either for buying your first home or for retirement.

Key Features:

  • You must be aged between 18 and 39 to open a LISA.
  • The property you are purchasing must be worth £450,000 or less.
  • You can use the funds after 12 months of saving, but there are restrictions if you use the funds for anything other than your first home or retirement.
  • The bonus is paid annually, and any money you withdraw from your LISA for other purposes (e.g. non-property-related) will incur a withdrawal penalty.

This scheme is ideal for younger buyers who are planning ahead and want to benefit from the 25% government bonus.

2. Help to Buy: ISA

The Help to Buy: ISA was a popular option for first-time buyers until it closed to new applicants in November 2019. However, those who already have a Help to Buy ISA can still benefit from it. The government will add a 25% bonus to the savings you’ve made towards your first home, up to a maximum bonus of £3,000.

Key Features:

  • You can save up to £200 per month into a Help to Buy ISA, and the government will contribute £1 for every £4 you save.
  • The bonus can be used towards properties costing up to £250,000 (or £450,000 in London).
  • You must be a first-time buyer, and the funds must be used for a property purchase.

Although the scheme is no longer open to new applicants, it remains a useful option for those who opened an account before the deadline.

3. Shared Ownership Scheme

The Shared Ownership Scheme allows you to buy a portion of a property (usually between 25% and 75%), and pay rent on the remaining portion. This can make it easier to get onto the property ladder, as you only need a smaller mortgage and deposit.

Eligibility:

  • You must be a first-time buyer or someone who used to own a home but cannot afford to buy one now.
  • The property must be within your local authority’s shared ownership scheme.
  • Your household income must be £80,000 or less (or £90,000 in London).

This scheme is particularly beneficial for buyers in expensive areas, where full ownership of a property might be out of reach.

4. The First Homes Scheme

The First Homes Scheme is a government initiative that aims to provide new homes for first-time buyers with a discount of at least 30% off the market price. In some areas, the discount could be higher, depending on local needs and affordability.

Key Features:

  • Available to first-time buyers and key workers.
  • The homes are sold at a discount compared to local market prices.
  • There are restrictions on reselling, with the discount remaining in place for future buyers.

This scheme is designed to make homeownership more affordable for first-time buyers, particularly in high-demand areas.

5. The Deposit Unlock Scheme

The Deposit Unlock Scheme is a newer option that helps buyers with a deposit of just 5%. This is particularly beneficial for those struggling to save a larger deposit. The scheme offers a mortgage guarantee to lenders, allowing them to offer loans to buyers with a smaller deposit, reducing the amount buyers need to save upfront.

Key Features:

  • Available for both first-time buyers and home movers.
  • Buyers only need to provide a 5% deposit.
  • Available for newly built homes.

This scheme is a great option for buyers who have a smaller deposit but want to access the benefits of a standard mortgage.

In addition to government-backed schemes, there are also some innovative options from lenders that can help homebuyers secure a mortgage with less upfront capital.

For example, one lender offers a 100% mortgage, meaning you can borrow the full value of the property based on the historic rent payments you’ve made as a tenant. This can be a great opportunity for renters who have a strong payment history but may struggle to save for a traditional deposit.

Another lender offers a 95% mortgage, with the remaining 5% being provided in the form of a loan. This reduces the deposit amount you need to save, making homeownership more accessible, especially for first-time buyers.

Some lenders also allow landlords to gift the deposit as equity towards your mortgage. This is an excellent option for buyers who have family members willing to assist with their deposit but don’t want to provide the funds outright.

These flexible options can be invaluable in helping you reach your homeownership goals, especially if you’re struggling with saving a large deposit. Be sure to discuss all available options with a mortgage advisor to determine which route best suits your financial situation.

Conclusion: Making the Most of Government Saving Schemes

With several government schemes in place to help UK buyers save for a deposit, it’s easier than ever to get onto the property ladder. Whether you’re a first-time buyer or a home mover, there are plenty of options available to help reduce the amount you need to save and secure the best mortgage deals.

At P&M Financial, we can help you navigate these saving schemes and choose the one that’s best for your circumstances. If you’re looking for expert advice on saving for your home, securing a mortgage, or understanding which schemes you’re eligible for, get in touch today and let us guide you every step of the way.

Get in touch with P&M Financial today for expert mortgage advice and together we can make your home buying dreams a reality 

admin@pm-financial.co.uk or give us a call on 0800 634 9250

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