WHEN first-time buyers Anupam and Shrabanti bought their £325,000 first home, they knew they would be forfeiting £6,000.
Anupam, 34, and his wife Shrabanti, 32, lost out on free cash from the government because their three-bedroom home in Manchester cost too much.
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The purchase limit for prospective homeowners outside of London who want to claim the 25% government bonus from their Help to Buy Isa is £250,000.
For first-time buyers in London, this limit is set slightly higher at £450,000.
The Help to Buy Isa is an account for those saving towards their first home and offers a bonus worth up to £3,000.
Anupam, a university lecturer and Shrabanti, an engineering consultant, had saved the maximum of £12,000 each in their account and would have been eligible for £6,000 in free cash if their home had been under £250,000.
The couple said it was a big disappointment not to get the free cash and that the scheme doesn’t seem suited to the current housing market.
Since the scheme was introduced in 2015, the average house price has soared but the limit has not increased.
Across the UK, the average house price is now around £279,569, according to Halifax.
MoneySavingExpert (MSE) founder Martin Lewis has previously called for the limit to be raised to stop first-time buyers missing out on vital cash for their dream home.
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The Help to Buy Isa scheme closed to new applicants in November 2019, although if you already have an account, you can continue paying into it until November 2029 and claim the bonus until 2030.
The account was replaced by the Lifetime Isa, which can be opened by anyone aged 18 to 39.
When you open a Lifetime Isa the government will add 25% to your savings, up to a maximum of £1,000 a year.
That means if you put in £4,000 a year you’ll get a £1,000 free cash bonus to put towards your first home.
Lifetime Isas can be used to buy homes worth up to £450,000, both in and outside London.
While it shouldn’t be the only thing you consider when buying your first home, it’s worth keeping these limits in mind so you don’t miss out on free cash.
Despite the set back, Anupam and Shrabanti managed to get into good saving habits during lockdown – saving around £5,000 by cutting back on eating out, going to the cinema and trips abroad.
After spotting their dream home on Countryside’s development in Belle Vue, Manchester, the couple decided to put down a deposit.
They got the keys to their first home on December 9, 2022 – their ten-year wedding anniversary.
It also meant they were in their own home in time to welcome their son Auritro, who is now seven-months old.
We sat down with Anupam to find out how they went from being savers to homeowners for The Sun’s My First Home series.
Tell me about your house
It’s a three-bedroom house in Belle Vue, Manchester.
We have a driveway that’s enough to fit two cars and there’s also facilities to charge electric cars.
Downstairs there is a living room and a separate kitchen-diner, as well as a cloakroom and a toilet.
There’s also a relatively large back garden.
There are two-bedrooms and a bathroom on the second-floor and a master bedroom and ensuite on the third floor.
How did you decide on the location?
The development isn’t too far from where we were living in Stockport.
It has accessible transport links for work – I work in London and it’s really easy for me to get to Manchester Piccadilly station.
How much was it?
Our house cost £325,000 and we put down a 10% deposit of £32,500.
We took out a mortgage of £204,305 for 35 years.
At the time, interest rates were really high so we were reluctant to take out a fixed-rate mortgage and be stuck with a high interest rate for a lengthy period of time.
So instead, we opted for a two-year tracker mortgage set at 1.1% above the base rate.
A tracker mortgage is linked to the Bank of England base rate.
While it seemed like a good idea at the time, our payments have now risen sharply.
We started paying around £1,400 and this has now gone up to £1,750.
It’s tricky to know if we made the right decision because the mortgage market is so up and down and we’re keeping an eye on fixed rates.
How did you save for it?
We had been saving for around three years and our plan was to purchase next year to give us more time to save for a deposit.
But with a baby on the way, we were getting worried about staying in our two-bedroom rented apartment because our energy bills had increased from around £80 to £200 a month.
The building was quite cold so we had to have the heating on constantly.
We began to feel overwhelmed at how we were going to manage financially once our son was born.
At around the start of November 2022, we found Countryside’s development at Bell Vue Place.
We set our hears on the property and decided we were going to try to move in before our ten-year wedding anniversary on December 9.
Luckily, we already had enough money saving for our £32,500 deposit.
The biggest help to our savings was the Covid-19 pandemic.
We completely stopped eating out and going to the movies, and we also weren’t able to travel back to my home country of Bangladesh, due to restrictions.
We would usually travel back once a year to see relatives, but this wasn’t possible.
Overall, I think Covid helped us to save around £5,000 towards our deposit.
We continued to be strict with our savings once the pandemic ended.
My wife and I both had a Help to Buy Isa and we were putting the maximum of £200 a month into our accounts.
In the end, we weren’t able to take advantage of this scheme because the asking price of our home was above the £250,000 limit.
We had both saved the maximum of £12,000 in these accounts.
This meant we missed out on a 25% bonus of £3,000 each from the government – a total of £6,000.
While we missed out on the cash, we’re still happy that we chose this home because it fits our needs perfectly.
As well as saving into our Isas, we were also putting away between £700 and £1,100 between us into a savings account.
How did you afford to furnish it?
As the property was a new build, we didn’t have to worry about doing any upgrades or work on the property.
I came with an integrated appliances like a fridge-freezer and oven, as well as smaller details like chrome sockets and light switches.
I think we saved around £5,000 on the cost of buying these items ourselves.
We also had a lot of furniture from our old house that we brought with us, and anything we were missing, we bought from Ikea.
Do you have any advice for other first time buyers?
When you’re buying your first home, it’s a good idea to think about what you will want in the future.
For example, if you have children, look at schools in the local area.
Meanwhile, we spoke to one couple who managed to bag their first-home using a “lifeline” small deposit scheme.
Plus, one first-time buyer bought with his mum after an easy mistake ruined his credit score.
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