During these tough times, first-time buyers have been hit hard. With 5% deposits off the table, it may be harder than ever to get onto the property ladder. However, there is help available, including using savings from a Lifetime ISA.
Here’s how to use a Lifetime ISA when buying your first home;
First, what is a Lifetime ISA?
Since launching in 2017, the Lifetime ISA is a government initiative to boost your deposit amount. The government will add a 25% bonus to your overall savings, up to a max of £1, 000.
For example, if you’re saving £4, 000 in a financial year, your savings will be topped up by £1, 000 to £5, 000. However, this scheme is capped to property values up to £450, 000.
Despite the cap, using a Lifetime ISA when buying your first home is still a good way to top up your deposit size. Personally, compared to a Help to Buy ISA, I think a Lifetime ISA can help you reach your goal faster, with unlimited payments.
How much can you borrow when using a lifetime ISA to buy your own home?
At the moment, lenders are limiting the market to a minimum deposit size of 10%. As a very rough idea of affordability, lenders are still allowing up to 4.5 to 5 times income.
Again, this is a very rough idea! Things like unsecured debt, child maintenance and student loans can impact how much you can borrow.
How do I withdraw money from a Lifetime ISA?
After finding a property, getting an agreement in principle in place and starting your mortgage application, let your solicitor know.
When you’re using a Lifetime ISA to buy your first home, your solicitor will help make sure you get your government bonus. First, they will draw down the Lifetime ISA funds and make sure your bonus is included in your deposit. This will have to happen before exchange and completion!
How can Affinity help?
When you’re buying your first home, we can help with expert, tailored advice. Being an independent broker, we don’t have ties to any particular lender, so any advice is unbiased and honest.
Now using Affinity Online, reaching out is easy. With a few clicks, get in touch with our specialist brokers who will guide you through the whole process. Plus - we’re fee-free! So advice might save you thousands, but it won’t cost you a penny.
Get in touch today here: https://bit.ly/3i34GSd