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Benefits of being a first-time buyer

MORTGAGES | 29.09.2022

You are classified as a first-time buyer if you or anyone you are buying with are purchasing your first residential property. Being a first-time buyer can be a little overwhelming. Buying a home is one of the largest purchases you will make, and one of the most significant commitments to tie into, which is why you will want to gather as much information, and be aware of all the benefits before going ahead, to make the most of buying your first home. 

As a first-time buyer, you have several advantages over someone who has previously bought a property. Here are some great benefits of being a first-time buyer:   

1. You don’t have to sell first 

If someone owns a property already, they will often have to sell their property before they can buy another, and there can be financial and legal delays along the way. As a first-time buyer, you are not tied into any existing mortgage contracts which can be an attractive trait to sellers who have a deadline in mind.   

2. You can get help from the government. 

There are schemes available where the government will help you purchase a home if you are a first-time buyer, such as:

First home scheme 

Such as the first homes scheme - this is a relatively new scheme which is part of government plans to make new homes in the UK more affordable.  With this scheme you get a discount of at least 30% of the market value of the new build home you wish to purchase, providing its market value is £250,000 or less (£420,000 or less if in London), if you match these criteria; 
  •  You have a household income of less than £80,000 a year (£90,000 if you live in London)
  • You have to pay no more than a 50% deposit on the remaining amount of the price of the property 
You may want to look into specific government schemes in more detail to see if they apply to your circumstances, and if/how they can help you secure your first home. 

Part Ownership scheme 

In this scheme, you purchase a percentage of a house or flat (between 25% and 75% depending on how much you have for a deposit) and your local housing association or council buys the remainder.You then pay your mortgage on the part of the property that you own and also pay rent on the part of the property that you don’t own. Over time, you will have the chance to buy more shares of the house or flat, which then means you own more and pay less rent. You can do this until the property is entirely yours. 

3. You’ll pay less tax 

A major first-time buyer benefit is that you’ll probably owe far less tax than those who have previously purchased a property. Stamp duty land tax, is a tax fee that you have to pay when you buy a house or a flat, on top of the price of the property itself.  If you are a first-time buyer, this stamp duty only applies to properties over £425,000 compared to someone who is not a first-time buyer who would need to pay this tax on a property over £250,000. 

4. You can elevate your savings 

First-time buyers have the advantage of using a Lifetime ISA. Anyone between the ages of 18 - 39 can open one, and it allows you to save up to £4000 per year, and the government will add 25% on top of these savings. Due to this being an ISA account, this also means you do not have to pay any tax on the interest that your savings accrues, meaning you should see your funds grow quickly.  Buying your first home can be an extremely exciting time, and even if it seems difficult, there are many options for a first-time buyer that can make it more attainable. If you’re thinking about buying your first home and want expert advice, or help to find the best deal for you, talk to one of our experts here - we’d be happy to help. 
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