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How to get on the property ladder

Your first home may feel like it will take a long time to save for. But there are ways to get there a little bit sooner.

How much does it cost to buy a first home?

Property is expensive, but it’s not just the home itself you need to think about. There are also the costs associated with estate agents, solicitors and surveys, as well as the cost of moving and any improvements or maintenance that may need to be carried out.

Thankfully stamp duty is something you may not have to pay, as first-time buyers can buy a first home up to the value of £500,000 without having to pay stamp duty.

Start by saving up for a deposit

You’ll likely need a deposit of at least 5% of the value of your future home. However, it may be worth saving considerably more than that to pay for the other costs outlined above. Doing so could also help you get a smaller mortgage with a better interest rate.

How to save for your first home

The rules of saving are simple, but that doesn’t mean they’re easy to follow:

  • Keep a track of your spending
  • Have a budget
  • Set savings targets
  • Monitor things regularly to ensure you are building towards your financial goal

Remember that small savings can add up to something big over the long term.

It’s okay to ask your family for help

Some people move back in with their parents to save on rent and build a deposit, while others are lucky enough to get financial gifts or loans from family members. In fact, the Bank of Mum and Dad is one of the UK’s biggest mortgage lenders.

Family members can also help you with your mortgage by being a guarantor. It means they are responsible for your mortgage payments if you can’t meet them, so it’s a big commitment.

How a Lifetime ISA can help you get on the property ladder

The Lifetime ISA is a government savings and investment scheme designed to help people save towards a first home deposit or their retirement.

You can put up to £4,000 per year into a Lifetime ISA and receive a 25% bonus on it if you use it to buy your first home or for your retirement.

This extra 25% is intended to help you take that first important step onto the property ladder. It’s what makes a Lifetime ISA such a good way of saving for a first home.

Is a Lifetime ISA only for first time buyers?

No, it can also be used to save for retirement. You can take your savings out when you are 60 or over. You'll pay a 25% charge if you withdraw the money or transfer it to a different ISA (not a Lifetime ISA) before you are 60.

Learn more about Lifetime ISAs

Can I save extra on top of a Lifetime ISA?

Yes! Alongside a savings Lifetime ISA you can also save in a Cash or Stocks and Shares ISA, for example. A Stocks and Shares ISA spreads your money across different investments, and will go up or down in value depending on the investments you choose. There are plenty of other types of ISA also available for you to choose from.

How to use a Lifetime ISA to buy a new home

In order to use the money in your Lifetime ISA to fund the purchase of your first home, you have to have had the account for at least 12 months. Once that 12 months is up you are free to use that money to buy a house as long as:

  • You are buying with a mortgage (buy-to-let mortgages not included)
  • You are using a conveyancer or solicitor to act for you in the purchase - withdrawing the money yourself will mean you incur the 25% withdrawal fee
  • The house costs £450,000 or less
  • It is your first home

Could a Lifetime ISA help you buy your first home?

For more information on saving your money with OneFamily, contact a member of our team or learn more about the OneFamily Lifetime ISA.

Discover our Lifetime ISA