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Help-to-Buy ISAs could help first-time buyers – what else do they need to know?

The big surprise from the 2015 Budget was a new ISA designed to help first-time buyers. The extra cash savers could get from these accounts could help them get on the housing ladder – but there’s a lot more to consider.

The Help-to-Buy ISA will launch in the autumn with a promise by the government to top up savings by 25% - for free. Anyone hoping to buy a house for the first time can make a £1,000 initial deposit, then add up to £200 a month. Then when that cash is used to buy, the government will top it up to a maximum of £3,000.

There will only be one ISA per person, but joint buyers can pool their cash and bonuses on the same property.

They sound like they could be a handy extra when saving for a deposit – but getting that cash together isn’t the only cost you need to prepare for.

Can you afford the monthly repayments?

It’s not as simple as thinking you can afford your monthly mortgage repayments, you also have to prove you can - now and in the future.

Lenders will look at how you would manage if you had children or were made redundant. They’ll want to see if you have enough cash to cope if interest rates rise. They'll also look at your income and any outgoings to get a sense of how affordable your repayments will be.

 

Do you know all the buying fees?

The arrangement, completion and booking fees charged by your lender may have different names but they all do a similar thing, and all of them will cost you money.

Your lender might also require a survey or valuation (more money), your solicitor won’t be free and there’s likely to be some Stamp Duty to pay too. Plus you’ll face an electronic transfer fee to move the money itself.

It’s easy to underestimate all these costs so try to get an estimate of them all before committing.

Have you worked out ALL the moving costs?

Moving into a home for the first time isn’t like renting. It’s going to be empty for start, so you’ll have the cost of getting all your gear transported. Then you may need to buy furniture and equipment like a kettle or lawnmower too.

It’ll also be a requirement of your mortgage that you have Buildings Insurance. It’s not mandatory to get contents insurance but it’s a good idea. There are often discounts for buying the two together.

Are you prepared for future costs?

Unfortunately it doesn’t stop there. If you’ve been living in rented accommodation you’re probably budgeting for bills and council tax already. But if you’re only now leaving home they can be quite a shock. Make sure you shop around for your gas, electricity, phone and broadband to get the best deal.

You should also be prepared for any repairs. Things break, and the older your house the more likely something will eventually go wrong. Do you really want to be stuck with no heating or hot water in the winter if your boiler breaks?

 

Are you saving for a home? What unexpected costs did you have when buying a house? Share your experiences in the comments section below.

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