There are so many aspects to think about when you’re looking to buy your first home and we understand that things can be confusing and even daunting. Here at RE/MAX, we pride ourselves on our service for the client, we are purely client-focussed. Our endeavours are for our clients to have the smoothest transition into their new home. Therefore, we’ve highlighted important information you should be aware of when thinking of purchasing your new home.
Help To Buy
Help to buy schemes exist to assist first-time buyers, or existing homeowners, who wish to purchase a new-build home. You often need a lower deposit than usual, with the Government providing a loan that covers part of the cost of the property, although you will still need a mortgage (which we can help with also!) to cover the rest. They are also known as Equity Loan schemes.
England
In England, the criteria for help to buy is as follows:
- The home must be under £600,000 in price
- You need a minimum 5% deposit
- You can get a loan of 20% from the Government
- 40% in London
- Interest-free for first 5 years
- You must use a repayment mortgage (not an interest-only mortgage)
- This needs to be at least 80% of the property price
- It needs to be from a qualifying lender
- You must use a home builder that is registered in the scheme
The benefits are that you don’t need to save as much for your deposit, but there are various factors to consider before deciding to buy a new-build property.
Wales
Similar to Help To Buy, except this scheme allows you to buy an existing property on the open market, rather than just new builds. The scheme works as follows:
- You provide 70% of the property’s price through a mortgage or personal savings
- Your mortgage is from an approved lender
- Your Housing Association provides an equity loan of 30% towards the property
- You pay back the equity loan at any time or when you sell the home, but it will always be at 30% of what the property is currently worth
The scheme is designed to benefit those from rural communities most, where it may be more difficult to purchase a home.
To be eligible you must fit the following criteria:
- You are not adequately housed or cannot afford to live in your current home
- You are not able to buy a suitable property for your needs without the scheme
- You are able to get a mortgage for the property
- You meet the criteria set by the local authority/Registered social landlord that operates the scheme
- You are not receiving Housing Benefits
You will need to research your Local Authority to see if the scheme is available and what you need to do to apply.
Stamp Duty & Tax Relief
Stamp Duty Land Tax (SDLT) is a tax paid for the purchase of property. However, some parts of the UK offer stamp duty relief for first-time buyers or cap the amount a property must be worth before you must pay it. Find out what each country offers below.
England
If the first property you’re buying is £300,000 or less, then you will not have to pay any stamp duty. If the property is worth up to £500,000, then you pay no stamp duty on the first £300,000 (e.g. if the property is worth £350,000, you only pay stamp duty for £50,000). If the property you’re purchasing is over £500,000, you will not qualify for first-time buyers’ relief and must pay the standard rates.
For Shared Ownership, you can now get relief on homes worth up to £500,000, which means you won’t have any stamp duty to pay.
Be aware that if you are a married couple or unmarried with both names on the mortgage deed, then you both need to be first-time buyers in order to get the relief; if one of you has bought a property recently, you won’t be eligible.
Wales
Stamp Duty is known as Land Transaction Tax (LTT). Currently, there is no relief for first-time buyers from paying the tax. However, there is 0% of tax to pay for properties worth up to £180,000; so, it is still avoidable if the budget for your first home falls under this bracket.
If you want a localised approach to your preferred area, take a look at our Real Estate Associate’s page to find your local expert to help you through this process.