How An ISA Helps You Step On Property Ladder?
Buying a home is an expensive time, but it is also a challenging prospect. Many first-time buyers struggle to step on to the property ladder. Saving as much money as you can for a deposit is sensible, and you should be looking for assistance in this activity.
A Lifetime ISA is a smart option to boost your funds. With a recent study by UK Finance suggesting that the typical first-time buyer needs a deposit of around £50,000 to buy their first home, any help buyers can get is more than welcome. This sum of money is based on saving for a deposit equivalent to 23% of the average property value.
It makes sense to save as much of a deposit as you can
However, even if you are fortunate enough to arrange a mortgage that only requires a 5% or 10% deposit, you still need to save a lot of money. A 10% deposit for the average priced property in the UK is around £23,000, and anyone buying in London would need around £45,000.
Therefore, a 25% boost on top of your savings would be very welcome, and this is what is available with a Lifetime ISA. This offer is available for people aged between 18 and 40 who are keen to step on the property ladder. With savers able to save £4,000 each year, there is a chance to boost your savings by £1,000 on an annual basis.
While you must open this account before you reach 40 years old, if you do, you can continue to make payments after this time. The Government bonus is applicable until you hit 50, so there is an opportunity for people approaching 40 to receive a significant benefit in their savings.
Couples can enhance their saving by working separately
Any potential buyer who was in a position to save £4,000 a year could save a £50,000 deposit in 12 and a half years. Also, if you are saving as a couple and have the funds to do so, you can open individual accounts. In doing so, and by saving £4,000 each per year, it would be possible to save a £50,000 deposit in five years.
While many potential buyers will feel saving this amount of money each year is beyond them, it is an excellent option for other buyers to consider. If you are focused on saving for a deposit and buying your first home, it makes sense to utilise every advantage that is open to you.
With the Help To Buy ISA scheme closed to new customers, this option is likely to be an attractive one. While the interest rates on the Lifetime ISA scheme isn’t as appealing as the rates were for Help To Buy customers, there is no point in looking back and wondering what might have been. If you are only starting your property buying adventure now, you should focus on what is available to you.
Saving for a home is a challenging process, and the cost of the deposit is a massive hurdle. First-time buyers should look for assistance, and a Lifetime ISA may be a great option.