Help to Buy ISAs supported nearly 89,000 property purchases in 2018

The number of property purchases supported by Help to Buy ISAs increased by 8% this year, rising from 82,940 in 2017/18 to 88,580, according to ludlowthompson.

The London estate agent found that first-time buyers in the capital have been the heaviest users of the Help to Buy scheme, which has helped 27,000 potential buyers since it began, with the total bonus amount paid by the government reaching £27 million.

Help to Buy ISAs were introduced by the government in December 2015 in an effort to give first-time buyers the opportunity to save up for a home of their own.

Through the scheme, first-time buyers receive a 25% bonus from the government on their savings of up to £12,000, potentially earning a maximum tax-free bonus of £3,000.

Along with the scheme, the growing competition for mortgage products amongst banks continues to help keep interest rates down, making mortgages more affordable for first-time buyers.

The following mortgage options for first-time buyers include:

• Guarantor mortgages: these help first-time buyers take out larger mortgages as a guarantor – most likely a close family member – promises to cover any missed mortgage payments if the buyer can’t afford them.
• Shared ownership mortgages: for first-time buyers earning less than £60,000 a year. This allows the buyer to take out a reduced mortgage in exchange for ownership of a certain percentage of a property, and a landlord or the government will own the rest.
• 40-year mortgages: these are popular with first-time buyers who are looking for lower monthly payments in a 40-year timeframe. ludlowthompson says the number of people choosing this mortgage jumped over 20-fold in 2018 to 3,483, up from just 162 in 2017.

Stephen Ludlow, chairman at ludlowthompson, comments: “Help to Buy ISAs are assisting more and more first-time buyers with property purchases as demand for property in the UK increases.”

“In addition, there is a wide range of mortgage products available that offer low interest rates for first-time buyers, making now a better time than any for buyers to get on the property ladder.”

Help to Buy ISAs will be available until 30 November 2019. The estate agent is advising first-time buyers to take advantage of the ISA as soon as possible.

If a buyer has opened one before then, they can keep it running until 1 December 2013, when the bonus must be claimed from the government on the day.