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How to save for your first home faster

Written by Frankie Entwistle, Digital Content Lead

Saving for your first home takes time, but there’s a few first-time buyer life hacks that can get your feet on the property ladder much quicker.

First-time buyer life 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 daunting to start saving for something that feels a long way off, so it’s worth doing your research now to take advantage of the shortcuts that will bring your moving-in date closer.

Luckily for you, we’ve done that research for you.

Lifetime ISA (the new Help to Buy ISA)

Lifetime ISAs replaced Help to Buy ISAs and, while there are slight differences, the biggest reason for opening one still stands:

The government will top-up everything you save by 25%!

So, if you put in £4,000, then the government will give you another £1,000 of free money. The catch is that you must use the money in your lifetime ISA to buy your first home (or to save for after you turn 60, but that’s a subject for another article).

If that’s what you were planning to do anyway then there’s no problem.

You can only take the money out to buy your first home (or after you turn 60).

You must have the account open, with money in it, for at least a year before you buy your home.

You must be aged between 18 and 39 (inclusive) to open a lifetime ISA.

You can put in up to £4,000 each tax year (tax year runs April – April).

The property you use it to buy must be worth no more than £450,000.

You must live in the property you buy.

Next steps:

If free money sounds good, open a lifetime ISA and start taking advantage of the government boost.

You can find out about OneFamily's Lifetime ISA here. Our Lifetime ISA invests in stocks and shares, which means your money is invested in the stock market. That means there's good potential for your money to grow over the long-term, but there is a chance you could lose money.

You can also sign up to get our exclusive guide to lifetime ISAs in your inbox using the form on this page.

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 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.

Only first-time buyers can use this scheme.

You must be 18 or over.

You need to be able to get a mortgage for at least half of the cost of the property.

You will need to pay a 5% deposit (£5,000 for every £100,000 the property costs)

The home has to be built as part of the scheme.

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.

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.

You must be a first-time buyer.

You must be eligible for the mortgage (the exact rules will depend on the mortgage and the bank’s rules).

You must be able to afford the repayments.

There will be other rules specific to your mortgage, for example a minimum deposit.

Next steps:

Speak to a mortgage adviser. The mortgage market changes constantly and you need 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.

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.

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.

You must be a first-time buyer or have bought a home before but now can’t afford one that meets your needs.

You must not be able to afford to buy a home that meets your needs without the scheme.

The property you buy needs to be part of the “shared ownership” scheme.

You must earn less than £80,000 a year.

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.

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.

The property must cost no more than £250,000.

You need to pay for at least 80% of the home using a mortgage and deposit combined.

You must put down a deposit of 5% of the cost of the property.

The property will need to have been built by a company registered with the scheme (these are all in Wales).

Next steps:

Firstly, you’ll need to speak to an approved financial advisor 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.

Help to Buy – equity loan

Sadly, this scheme is now closed to new applications. We’ve included it just so you’re aware.

Most importantly: get started

Got £25 in your current account? If you put it in a lifetime ISA now you'll be taking your first big step towards owning your own home. OneFamily's Lifetime ISA is a stocks and shares product, which means your money is invested in the stock market. While there is good potential for it to therefore grow in the long-term, there is a risk you could lose money.

Not yet sure if now’s the time? Sign up to receive our lifetime ISA guide by email using the form on this page to find out more about this savings shortcut.

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