Help to Buy - is it worthwhile?

By Will Leyland, 28 September 2018

A large majority of under 35’s in the UK now rent rather than own, but is home ownership as far out of reach as the news makes out?

Is it beneficial to open a Help to Buy ISA?

If you’re saving up a deposit for a house, then in short yes it’s worth doing. The government introduced the scheme a few years ago to help young buyers get on to the property ladder. If you save into the scheme the government will boost your savings by 25%, with the maximum bonus being £3,000, along with your maximum amount of £12,000.

If two people were to save in two schemes then the government could top up your savings by £6,000 as well as your £24,000, making the total £30,000 towards a house deposit, making your budget bigger or your repayments lower.

The scheme is available with most high street banks and whilst it doesn’t offer great interest rates it is tax free and, coupled with the new rules meaning first time buyers don’t pay stamp duty, could mean huge savings overall.

What about part ownership?

One interesting idea that has come about recently with the advent of the Help to Buy scheme is that of shared ownership. Essentially this means that if you can’t afford 100% of the mortgage you can purchase between 25% and 75% of the property whilst paying rent on the remaining share that you don’t own.

You can use your Help to Buy ISA to achieve this, and will need to approach your local Help to Buy agent to see which properties are available to you. Each area has its own agent and you’re eligible if your household income is less than £80,000 outside of London or less than £90,000 if you live in London.

You’d need to get a mortgage on the remaining amount that you’d like to own, however, the cost of repayment would be significantly lower than if you got a full mortgage and also your deposit can be much smaller than you’d need if you went for a larger 100% mortgage

Is renting really that bad?

In short, no. It really does depend on your circumstances though. Renting can be much freer and much less hassle than owning your own property mainly down to the fact that you don’t have to deal with maintenance and rather than having to sign up to 20 years’ worth of repayments lest you go through a lengthy resale process, you can move out whenever you want.

Location isn’t an issue for renters either and the stigma of long term renting isn’t what it once was as a large majority of under 35’s in the UK now rent rather than own. Rewind even ten years ago and home ownership was seen as the absolute priority for young people as soon as they were in a stable job.

These days attitudes have changed and, yes, it’s much more expensive to rent but that needs to be considered in the context of whether you’re willing to pay for the extra freedom or whether you’d rather have the long term stability and investment of your own property.

Are you looking to rent in the UK? Contact us today to find out how we can help you find your perfect home.

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