FI­NANCE YOUR HOME MOVE

House Beautiful (UK) - - CONTENTS -

Whether you’re a first-time buyer, mov­ing into your ‘for­ever home’, look­ing to help fam­ily mem­bers onto the prop­erty lad­der, or want to find ways to cash in on the value of your home, our guide to the schemes and prod­ucts avail­able will help…

FIRST-TIME BUY­ERS

Get­ting a first foot on the prop­erty lad­der isn’t easy but there are plenty of po­ten­tial ways to find as­sis­tance.

LIFE­TIME ISAS

If you’re aged 18-39, you can take out a Life­time ISA (LISA) – a sav­ings ac­count specif­i­cally to help you save for a first home (which must cost un­der £450,000) or for re­tire­ment.

You can stash up to £4,000 per tax year into your LISA ev­ery tax year un­til you’re 50 and the Govern­ment will top it up with a 25 per cent bonus. But be warned: if you with­draw the funds be­fore buy­ing a house or re­tir­ing, then you will lose the bonus and be charged a 25 per cent penalty, mean­ing you could end with less than you started with. See gov.uk/life­time-isa for more.

SHARED OWN­ER­SHIP

On this scheme, you are able to buy any­thing be­tween 25 per cent and 75 per cent of a prop­erty – and then pay re­duced rent on the rest. You’ll need at least five per cent of the prop­erty price for the de­posit and a mort­gage for the part you’re go­ing to own.

HELP TO BUY: EQ­UITY LOAN

In­ter­est-free for the first five years, the Help to Buy: Eq­uity Loan al­lows you to bor­row 20 per cent of the prop­erty price (up to 40 per cent in Lon­don) for prop­er­ties cost­ing up to £600,000. You’ll need a mort­gage and a five per cent de­posit for the rest. Find out more at help­to­buy.gov.uk.

FAM­ILY MORT­GAGES

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

MOV­ING ON UP

If it’s time to move be­cause you need a big­ger place or are plan­ning to relocate, you could ei­ther take your ex­ist­ing mort­gage with you (known as port­ing) if you’re al­ready on a great deal, or you could take the op­por­tu­nity to re­mort­gage. Port­ing means you have to re­pay your mort­gage and then con­tinue with the same terms and con­di­tions on your new prop­erty – but you have to reap­ply for it and there are no guar­an­tees your lender will al­low you to do it. It will still be sub­ject to le­gal fees and stamp duty. If, how­ever, your deal’s al­most com­ing to an end, or you’re mov­ing to a more ex­pen­sive prop­erty, then it’s worth see­ing an in­de­pen­dent mort­gage bro­ker to help you scour all the po­ten­tial options. You can find one at un­bi­ased.co.uk or vouched­for.co.uk.

PROP­ERTY RICH, CASH POOR?

If you’re over 55 and a home­owner, re­leas­ing eq­uity from your house might be on your radar. How much you can bor­row de­pends on the lender, your prop­erty value and your age.

The most pop­u­lar type of eq­uity re­lease is a life­time mort­gage. This en­ables home­own­ers to bor­row against the value of their prop­erty, ei­ther tak­ing a lump sum or reg­u­lar with­drawals. There are no monthly re­pay­ments, the in­ter­est (typ­i­cally around five per cent, but some are as low as three per cent) rolls up and is added to the loan. The loan plus in­ter­est ac­crued is only paid back when the home­owner goes into long-term care or dies, although many lenders will al­low you to make ad hoc re­pay­ments to con­trol the size of the over­all debt.

Eq­uity re­lease is an ex­pen­sive way to fund your re­tire­ment or help fam­ily, es­pe­cially if you have other more ap­pro­pri­ate options for your long-term fi­nan­cial plan­ning, such as down­siz­ing. Talk to your fam­ily be­fore ap­proach­ing any eq­uity re­lease com­pany, find an in­de­pen­dent fi­nan­cial ad­viser who spe­cialises in re­tire­ment plan­ning or visit the So­ci­ety of Later Life Ad­vis­ers (so­ci­ety­oflater­lifead­vis­ers.co.uk).

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