If you are thinking about buying your own place or you are thinking of supporting one of your family to buy a place of their own it can be useful to have a good checklist. Enable’s IFAS of Bishop’s Stortford know you have to start with saving up for a deposit.
Step one to owning a place of your own is to save. To do this you might want to consider using a Help to buy ISA or a Lifetime ISA as these receive a bonus top-up to your savings. ISA stands for an individual savings account. Unlike a standard savings account with your bank, an ISA allows you to hold cash or investments without having to pay tax on interest, dividends, or gains. There are limits on how much you can put away each year, and you have the option of a variable or fixed interest rates.
For first-time buyers, a Help-to-Buy ISA is designed to help save a deposit for a first home. You open your ISA with an initial lump sum of up to £1,000, and can then save up to £200 per month (so in the first month you can deposit £1,200 in total). You can miss monthly deposits but you can’t roll them over, so the maximum you can pay in is always £200. You can save up to £12,000 in total (deposits plus interest) and when you complete the purchase of your first home, the government adds a bonus of 25 per cent (so a £12,000 ISA is boosted to £15,000).
Then there is a Lifetime ISA (LISA) that can help you save for a deposit or for retirement or both. You can open one between the ages of 18 and 40, paying in up to £4,000 per year, to which the government adds a 25 per cent bonus (to a maximum total bonus of £32,000 by the age of 50). The bigger the deposit you can save, the better the mortgage rates you are likely to get to it is worth starting to save as soon as you can.