Are you a first time buyer? Did you know that there is a range of financial benefits to being in your position?
At The Levels Financial, we know that buying your first home is an exciting process and is with you every step of the way, so you can get back to adding to your Pinterest boards or shopping for that perfect sofa! Read on to find out more about the benefits of being a first time home buyer.
What Classes You As A ‘First Time Home Buyer’
A first time buyer is someone who is buying a residential property for the first time, and has not previously bought or owned a property. HMRC states that to be identified as a first time home buyer you: “Must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent in land situated anywhere in the world.”
In other words: If you’ve previously owned, or gained equity (the amount of money held in an asset, such as a property, would provide you with if you were to sell and any debt associated with it were also paid off) from a property, either in the UK or abroad, you do not class as a first time buyer.
If you’ve never bought or owned a property then you class as a first time home buyer. For more information about your home buyer status, or information about buying a home, see our various blog posts:
- A complete guide to UK mortgage types
- 5 steps to increase your chances of mortgage approval
- A guide: first time buyer mortgage advice
The Benefits Of Being A First Time Buyer
Imagine this, you’re looking to buy your first home, and you’ve saved to pull together a deposit, which we know is hard to do, especially in the current financial crisis (see our blog post ‘How to save for a mortgage in the cost of living crisis’ for more information). Now the fun starts, looking for houses, applying for a mortgage in principle and finally gaining the keys to your new home!
As a first time buyer, you may have several advantages when putting in offers on houses you like, over someone who has previously purchased and looking to move homes, including:
You’re Not In A ‘Chain’
Unlike someone who is looking to move, they will often have to sell their current home first to purchase a new one. This could lead to financial and legal delays which could slow down the home buying process.
As a first time buyer, you won’t have the same limitations or tied up in an existing mortgage contract. All of this could work in your favour if sellers are keen to sell quickly without hassle.
A ‘chain’ is where a group of home buyers and sellers are connected due to having to wait for one another to sell or buy to move forward with moving into your new property. As a first time buyer, you won’t be ‘held up’ waiting for someone to purchase your house before being able to purchase your new home. This aspect can be particularly attractive to sellers who are looking to sell their home quickly.
Government Help Is Available
Although the ‘help to buy’ scheme was no longer open to new applicants from the 31st of October 2022, the Government is still offering various schemes to help first time buyers get on the property ladder. These include:
First Time Buyer Initiative (FTBI)
This initiative’s aims to help ensure there are more affordable homes available to first time buyers, so they don’t get priced out of the housing market.
Help to Buy Mortgage Guarantee Scheme
In April 2021, the UK Government launched the Mortgage Guarantee scheme. This was designed to increase the amount of 5% deposits that mortgage lenders would accept for first time buyers. Lenders using this scheme will pay a fee to the Government which will then compensate them for a portion of their losses if the buyers are unable to pay their mortgage and the house becomes repossessed.
Lifetime Individual Savings Accounts(LISA)
Anyone over the age of 18, but under the age of 40, can open an LISA. You can save up to £4000 a year in the account until you’re 50 and you must make your first payment before you’re 40. The Government will then add 25% to the amount you’ve saved, up to a maximum of £1000 a year.
The LISA can then be used for a deposit for a house, or withdrawn after the age of 60. (If you withdraw any money before you’re 60 or not for use towards a deposit on a house, there will be a penalty charge).
No Need To Pay Stamp Duty
If you’re a first time buyer and your property value is less than £425,000 you don’t need to pay stamp duty on your property purchase. Stamp duty is normally a percentage of the property value and is a tax that must be paid to HMRC after property completion. But a benefit of being a first time buyer, you normally do not have to pay it.
Get Your Foot On The Property Ladder With The Levels Financial
Looking to buy your first home? Unsure where to start? Our helpful and award-winning team of mortgage advisors are on hand to support you every step of the way. From understanding your budget and requirements to completing the necessary paperwork, our team can help you throughout the whole house-buying process.
For more information or to book your free initial consultation contact our team today at admin@thelevelsfinancial.co.uk or call us on 01458 772 040.
Please note:
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
