Finance Options for Your New Home

Whether you’re a first-time buyer who is hopping onto the property ladder, you are moving into your forever home to accommodate a growing family, or you are looking to buy a property as an investment project, there are various finance options which you can choose to find the solution that works best for you.

1. Lifetime ISAs

For first time buyers below the age of 39, a Lifetime ISA can be opened which is a savings account specifically designed to help you save for a first home or retirement. You can save up to £4,000 per tax year into your LISA until you’re 50 years old and the Government will contribute with a 25 per cent bonus. The conditions of a Lifetime ISA state that the home you buy must cost under £450,000 and if you choose to withdraw the funds before buying a house or retiring, then you will lose the bonus and be charged a 25 per cent penalty.

2. Family mortgages

Family mortgages allow a family member or friend to help first-time buyers with their deposit. As standard, this works by them putting 10 per cent of the purchase price of the house into a fixed term savings account for a set number of years, acting as a guarantor. Common family mortgage schemes include the Barclays Family Springboard and Halifax Boost, but there are a number of different types available, so it pays to do your research. As long as the purchaser doesn’t default on mortgage payments, they get their money back over time with added interest.

3. Financial loans

When making a property purchase with a mortgage, the buyer is able to put down a percentage of the total money owed, typically at least 5% of the purchase price. This means the bank or mortgage lender then lending the difference with a charge on the property so if you don’t pay the money back under the terms agreed, the bank can apply to the courts to take ownership of the property. Buying with a mortgage allows you to leverage your money so that you can afford a more expensive property, having the option to just put down a deposit using savings or payday loans if you need a boost. In the past, the calculation was a simple as a multiple of your annual income, but nowadays the calculations are more comprehensive and take into account all of your spending habits. Each lender will have their own specific criteria, so it is best to compare options and choose the solution that works best for you.

4. Co-buying

Buying a property alongside a partner, family member or friends can be a more economical way of getting on the property ladder as the finances can be split in half, or further depending on the number of occupants. It is important to make sure everyone involved agrees before you enter into the agreement as it can lead to complications down the road if a written agreement is not in place.

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