Saving for your first home takes time, but there are a few first-time buyer hacks that can get your feet on the property ladder much quicker.
First-time buyer hacks
If your Instagram feed is full of interior design inspiration, then maybe now’s the time to take the first steps to making your first home a reality.
It can be difficult to motivate yourself to start saving for something that feels a long way off. But it’s worth doing your research now, to take advantage of the shortcuts that will bring your moving-in date closer.
We’ve researched first home schemes that could help you get those keys in your hand quicker.
Schemes for first-time buyers
- Lifetime ISA. Get up to 25% government bonus on the money you put in.
- First Homes scheme. Cheaper homes for first-time buyers.
- Mortgages for first-time buyers. Mortgage offers exclusively for first-time buyers
- Shared ownership scheme. Buy a percentage of the property. The rest you pay as rent.
- Help to Buy - Wales. Pay for part of the property with a mortgage. The rest you'll pay for with a loan.
Lifetime ISA (the new help to buy ISA)
Lifetime ISAs replaced help to buy ISAs in 2017 and, while there are slight differences, the biggest reason for opening one still stands:
The government will top-up everything you save by 25%!
You can put in up to £4,000 each tax year, which means you can get up to another £1,000 extra from the government every year.
You must use the money in your lifetime ISA to buy your first home (or for an extra pot of money for life after 60, but that’s a subject for another article). If you're reading this article, you probably were planning on using it to buy your first home anyway, but it's still a good idea to take a look at the lifetime ISA rules to make sure it's the right product for you.
You can choose to save your money in a cash lifetime ISA, or invest it in a stocks and shares lifetime ISA, like OneFamily's Lifetime ISA.
Is a lifetime ISA right for you?
Next steps:
If up to £1,000 a year sounds good, open a lifetime ISA and start taking advantage of the government bonus.
Our customer, Dan, did just that. Using his OneFamily Lifetime ISA he got an extra £11,000 towards his first home in bonus and investment returns.
Get up to £1,000 extra towards your first home deposit every year with a OneFamily Lifetime ISA
First Homes scheme
To help first-time buyers get on the property ladder, the government set up a scheme in 2021 to offer cheaper homes to people who haven’t owned before: the First Homes scheme.
The properties that are part of the scheme are between 30% and 50% less than their market value, so the savings could be huge. There are around 100 locations, all in England, with First Homes scheme properties.
Even better, you can use your lifetime ISA savings to pay the deposit: win-win.
Is the First Homes scheme right for you?
Next steps:
You can’t apply until you’re ready to buy, but you can find out if there’s any First Homes schemes where you’re hoping to live. Then you can keep an eye out for any coming up for sale when the time’s right.
There isn’t a list of all the schemes, unfortunately, but google “First Homes scheme Brighton” for example to see if any housing developments in your area are building First Homes scheme properties.
Invest in a climate-focused fund with OneFamily's Lifetime ISA.
Mortgages designed for first-time buyers
We can’t recommend any specific mortgages, but there are offers out there that are only for first-time buyers.
For example, mortgages that offer to lend you more than the standard 4.5 times your income or allow you to use a smaller deposit than other buyers.
Are these types of mortgage right for you?
Next steps:
Speak to a mortgage adviser. The mortgage market changes constantly and you'll need an expert opinion to get the best offer for you at the time you’re looking to buy. Your mortgage adviser will also do the application for you, which is incredibly helpful.
Some mortgage advisers don’t charge first-time buyers, or charge them less, and some are paid by the bank that you take the mortgage out with. It’s best to find out how they will be paid before you start so you can budget for it if you’re footing the bill.
Give your money greater potential to out-grow inflation* with a stocks and shares lifetime ISA
Shared ownership schemes, also known as “part buy, part rent”
This scheme can remove some of the hurdles to buying your first home. If you’re not able to get a mortgage big enough for the type of home you want, or you’ve not yet saved a big enough deposit, shared ownership could put the keys in your hand.
Plus, you can still put your lifetime ISA savings towards the deposit for shared ownership homes. Although it's important to know that the lifetime ISA £450,000 property limit applies to the full price of the home, not just the portion you're buying.
Here’s how it works. You buy a percentage of the property - between 10% and 75%. If you use a mortgage to do this, then you’ll make repayments on the mortgage each month.
A landlord owns the rest of the property and charges you rent to live there. The landlord is usually a housing association or council.
So, each month you’ll pay rent to the landlord and mortgage repayments to the bank.
You can keep buying more of your home over time meaning you’ll own a bigger percentage and you’ll pay less rent.
Not every property can be bought this way. You’ll need to search specifically for “shared ownership” when you’re house hunting.
Is shared ownership right for you?
Next steps:
Apply on the UK government website. If you’re accepted onto the scheme, you can then start looking for homes using the “shared ownership” filter on the usual property search websites/apps.
Buy your first home sooner with a OneFamily Lifetime ISA
Help to Buy – Wales
This scheme is similar to shared ownership, in that you’ll pay for part of your property with a mortgage, but the rest of the property will be paid for with a loan. The loan can cover up to 20% of the cost of your home.
You’ll then make mortgage repayments to your bank each month as well as loan repayments.
You can also overpay on your loan repayments to buy a bigger share of your home.
Is Help to Buy right for you?
Next steps:
Firstly, you’ll need to speak to an approved financial adviser for the scheme. You can find a list of these on the Welsh government website.
As long as they’re happy that you’re eligible, you can then start looking for homes that are built by one of the building firms that are registered for the scheme.
Open a OneFamily Lifetime ISA
Our Lifetime ISA comes with a 25% government bonus, worth up to £1,000 a year!
Our Lifetime ISA invests in stocks and shares, so the value is likely to go up and down over time. This is normal for this type on investment, but it means there is a risk you could get back less than you put in if you withdraw at a time when the value is lower.
*Compared to a cash lifetime ISA, which grows your money with an interest rate and doesn't invest it.
