For many first-time buyers, saving for their first home can be daunting. When saving money for a property, ISAs (Individual Savings Accounts) are a sensible and reliable option. There are a variety of ISAs to choose from, all with different benefits.
Perhaps the best part about using ISAs to save money is that you don’t have to pay UK income or capital gains tax. However, there is a cap on the amount you’re allowed to pay into ISAs each year - currently, the allowance is £20,000.
What ISAs Are Available?
If you’re between the ages of 18 and 39, one of the ISAs recommended for first-time buyers is a Lifetime ISA. You can save up to £4,000 yearly, which will be topped up by 25% by the government each year. The Help To Buy ISA, which was closed to new investors in 2019, offers a smaller total bonus of up to £3,000. ISAs are a great way to save for your first property - once the account has been open for twelve months, you can withdraw when you’re ready to buy your first home.
The Conveyancing Process When Buying A House
If you decide to use funds within a Lifetime ISA to pay for your first home, you have to ask your ISA provider to transfer the money to a conveyancer. So, what is the conveyancing process? To put it simply, conveyancers help you through the process of buying your first home. The conveyancing process is the legal procedure of transferring property from one owner to another. Once you have instructed your Lifetime ISA provider to transfer your savings to the conveyancer, the funds should be available at the exchange of contracts.
A Lifetime ISA can be used as a savings account for later in life, even after the purchase of your first home. You can continue to pay into the account until your 50th birthday and will continue to receive the government bonuses. From the age of 60, you can withdraw from the ISA without any withdrawal charges. Do we need to mention the 20% withdrawal fee?
However, if you intend to use a Help To Buy ISA to buy your first home, when you are close to the purchase, you need to close your Help To Buy ISA. Your bank will provide you with a closing letter, which you must give to your conveyancer so that they can apply for the government bonus. This will then be paid directly to your conveyancer, ready in time for purchase.
For more information about the conveyancing process when buying a house, as well as the conveyancing costs when buying a house, contact us at Bowsers Solicitors today.
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