The Inside Edge
In today’s budget the Chancellor announced more support for people wishing to buy their own homes, but will it make things easier for you and how can you go about saving up a deposit of your own?
The additional support for would-be home owners comes in two forms. Firstly the New Buy scheme is being expanded. This scheme helps buyers secure a mortgage by reducing the level of deposit that you have to raise on your own.
It’s effectively an interest free loan from the Government which you can put towards your deposit and pay back when you sell the house. This scheme will be available to anyone buying a new home under £600,000. The second support mechanism will be launched in 2014 nd will be a guarantee provided to banks against mortgages, effectively allowing banks to reduce deposits to 5% without taking on so much risk. Think of it as an insurance policy for banks.
So where does this leave you?
If you are thinking about buying a house you will likely still have to raise some kind of deposit – whether it’s 5% or 25% – so how do you go about saving this?
One way is to get an ISA in each tax year so you can put your savings into an interest free savings account.
For 2013/14 the annual ISA investment allowance will be £11,520, of which £5,760 can be saved in a cash ISA and the remainder can be invested in a stocks and shares ISA. If you do not use your ISA allowance for a given year then you lose it, so it can be prudent to use your allowance each year to maximise your tax free savings.