You are here: Financial help for buyers and first time buyers

Financial help for buyers and first time buyers

Getting Financial Help to Buy a Home

Last year around 370,000 new first-time buyer mortgages were completed – a total lending of £62 billion. With the ever-popular government Help to Buy, Lifetime ISAS and many competitive mortgage deals available it is no surprise this is the highest figure for the last 12 years.

So what financial help is available for home buyers and first time buyers?

Financial help for buyers and first time buyers
Financial help for buyers and first time buyers

Let’s Take a look at Help to Buy ISAs

What is a Help to Buy ISA?

If you save to buy your first home through a Help to Buy ISA, the Government will give you 25% of the value of our ISA up to a maximum of £3000 upon completion of the purchase. Whilst you can’t use this for a deposit because deposits are paid at exchange, you may be able to either negotiate with the vendor to pay this sum on completion or use it to reduce your mortgage borrowing. To claim the bonus there must be a minimum of £1600 in the ISA.

Can I get a Help to Buy ISA?

You can if you are a first-time buyer, you are over the age of 16 and you will be living in the property and you don’t own another property. Also, the sale price must not be over £250,000 or £450,000 for London properties. It is worth noting there is no stamp duty to pay for first-time buyers if the purchase price is under £300,000 for England and Northern Ireland, under £140,000 for Scotland and under £180,000 for Wales.

Where can I get a Help to Buy ISA?

There are many providers, but the government website lists the following providers for Help to Buy ISAs;

  • Aldermore Bank
  • Bank of Scotland
  • Barclays
  • Clydesdale Bank
  • Halifax
  • HSBC
  • Lloyds Bank
  • Nationwide
  • NatWest
  • Newcastle Building Society
  • Santander
  • Ulster Bank
  • Virgin Money
  • Yorkshire Bank
  • Yorkshire Building Society

Lifetime ISAs are another option

What is a Lifetime ISA?

These are more recent and were brought in during 2017 and are an effective way to save either for your first home or for your retirement if you are aged between 18 and 39. You can earn an additional 25% bonus from the Government on your savings. You can save up to £4000 per year until you are 50 and the bonus is paid monthly. The maximum bonus is £33,000. You can use the money for house purchase after 1 year, providing the purchase price of the property is not more than £450,000, or after age 60 for a pension.

Can I get a Lifetime ISA?

Yes - if you are aged 18-39 when you apply, have not owned a home before and will be living in it yourself you can use the bonus to help buy a property. If you own or have owned a property, you can use the lifetime ISA for retirement savings.

If you have a Lifetime ISA as well as a Help to Buy ISA, you can only use one to help buy your first home.

Where can I get a Lifetime ISA?

There are not many LISA providers. At the time of writing Newcastle Building Society, Skipton Building Society and Nottingham Building Society have Lifetime ISAs.

What is a Help to Buy equity loan?

If you are buying a new property and the purchase price is under £600,000 for England or £300,000 for Wales, it is your only home and you will be living in it yourself, you may be able to get a low-interest loan towards your deposit. This is called an equity loan. You will need a 5% deposit yourself and the government will loan you the other 5% in England and up to 20% in Wales. There are slightly different repayment rules for England and Wales – the links are below;

For England check out https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loan for eligibility and costs. The house must be purchased through an approved builder which Help to Buy agents https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/ have a list of.

For Wales check out https://gov.wales/help-buy-wales and for a list of approved builders https://gov.wales/help-buy-wales-participating-builders

Right to Buy: buying your council home

If you are a council tenant in England or Northern Ireland, you may have a right to buy your home and be eligible for a substantial discount. In England the maximum discount is £82,800, for London boroughs it is £110,500. Northern Ireland still operates a similar scheme but the maximum discount is £24,000 and the scheme is called the House Sales Scheme.

Schemes like this are no longer available in Scotland or Wales. To see if you are eligible in England https://www.gov.uk/right-to-buy-buying-your-council-home for government information, there is also a discount calculator https://righttobuy.gov.uk/right-to-buy-calculator/ . For Ireland https://www.nidirect.gov.uk/articles/house-sales-scheme

Right to Acquire

If your home used to be owned by your local council and it was sold to a housing association you may be eligible to buy it with a discount, this is called Right to Acquire. You can click on the links in the Right to Buy section above to find out more.

Summary of schemes available for financial help to buy a home in Wales

Rent to Own https://gov.wales/rent-own-wales for assistance with deposits for new properties

Shared Ownership https://gov.wales/shared-ownership-wales to help purchase a proportion of the property and pay rent on the rest

Help to Buy https://gov.wales/help-buy-wales loans for those with a 5% deposit

Homebuy https://gov.wales/homebuy-wales specific eligibility for equity loan of 30% - 50%

Summary of schemes available for financial help to buy a home in Northern Ireland

Co-ownership housing https://www.nidirect.gov.uk/articles/co-ownership-housing you purchase a proportion of the property and rent the remaining portion from a co-owner association if you are eligible.

Equity sharing https://www.nidirect.gov.uk/articles/equity-sharing if you are in social housing and eligieble, you can own a percentage of the property and lease the rest from the landlord.

House sales scheme https://www.nidirect.gov.uk/articles/house-sales-scheme gives you the chance if you are eligible to buy your social housing property at a discounted price

Rent to Own scheme https://www.nidirect.gov.uk/articles/rent-to-own  if you can't afford to buy your home but want to buy one in the future, if you are eligible, OwnCo Homes buys the property you choose and rents it to you with the option to buy at the end of a three-years.

Summary of schemes available for financial help to buy a home in Scotland

Open Market Shared Equity scheme https://www.mygov.scot/open-market-shared-equity-scheme/ If you are a first time buyers or have other eligibility and are on a low or middle income you can purchase a property on the open market and providing you have the larger share the government will purchase the remainder under a shared equity agreement.

New Supply Shared Equity scheme https://www.mygov.scot/new-supply-shared-equity-scheme/ for first time buyers who qualify and wish to buy a property owned by the council or housing association, you will purchase a larger share and the Scottish Government will own the remaining share under a shared equity agreement.

Shared Ownership scheme https://www.mygov.scot/shared-ownership/overview/  For those who want to own a home but can’t afford it. If you meet the criteria, you only need to be able to afford 25% of the purchase value, the housing association owns the remainder and you must pay an occupancy charge to them. The Scottish Government has a list of shared ownership properties when there are some available.

Help to Buy (Scotland) Affordable New Build scheme https://www.mygov.scot/help-to-buy/ for new builds the Scottish Government will pay up to 15% of the purchase price and hold the remaining share under a shared equity agreement.

Summary of schemes available for financial help to buy a home in England

Help to Buy: Shared Ownership https://www.helptobuy.gov.uk/shared-ownership/  lets you buy a minimum of 25% of the purchase price and pay rent on the rest if you are eligible.

Help to Buy: Equity Loan https://www.helptobuy.gov.uk/equity-loan/equity-loans/ for new build homes if you have 5% deposit and are eligible the Government may lend you up to 20% of the purchase price.

London Help to Buy https://www.helptobuy.gov.uk/equity-loan/london-help-to-buy/ this is the same as the Equity Loan for new builds but the Government will loan you up to 40%. Eligibility criteria apply.

Starter Homes https://www.ownyourhome.gov.uk/scheme/starter-homes/ This scheme has not been launched yet but gives people aged 40 and under in England a 20% discount (40% in London) the opportunity to buy a starter home with a 20% discount. Keep an eye out for the launch of this scheme.

Which help to buy scheme is right for me?

Unsure which scheme is right for you? https://www.ownyourhome.gov.uk/scheme-finder/#residency-type-question click here to find out [a short government questionnaire for options available in England]