First Time Buyers - Making the step towards your New Home
The recently announced Stamp Duty changes from the Government is good news if you're a first-time buyer. If you are looking to buy a property which costs less than £425,000, you will not have to pay any stamp duty at all. If you are looking at a property costing between £425,001 and £625,000, you'll have to pay a rate of 5% for the remaining part.
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First Time Buyer Properties Shepherds Bush and Hammersmith
This new government incentive is wellcomed by the property industy and the first time buyers market - However this is just one factor when considering to buy for the first time - so what else do you need to do - to help we have listed our top tips and advice.
1. Start gathering a deposit
In order to buy your first home you need to save a deposit. Your mortgage deposit will normally need to be for at least 5% of the value of the property you want to buy. So if you want to buy a home costing £450,000, you’ll need to save up a deposit of at least £22,500, and ideally though you would save more than 5%. The bigger the deposit, the wider range of mortgages you’ll be able to access at cheaper rates. This is because with a bigger deposit you’re perceived as lower risk by mortgage lenders.
2. Check your credit score
While you are saving to buy your first home boost your credit score as lenders want to see you are a reliable borrower when they are assessing your mortgage application.
3. Keep an eye on your current account
How much you can borrow will be determined by your lender who will do an affordability test based on your income and monthly outgoings. Keep an eye on your finances and that your outgoings are under control .
Take into account additional costs - owning your own home is different to renting - you’ll discover there are many costs involved associated with a purchase this includes legal fees, taxes, surveys and removal costs.
If your a leasehold get an idea of running cost this includes ground rent, service charges, ongoing maintenance costs and utilities.
5. Get expert advice from a mortgage broker
Purchasing your own home is the most expensive purchase of your life - research on different loans, expert advice and as well as shopping around is very much advised.
There are a number of mortgage products with different terms and conditions depending on your own financial circumstances. Also with interest rates likely to change they can keep you updated and source the best mortgage for you .Their expertise will mean you get the best possible mortgage for your circumstances at the lowest possible rate. They can also help you navigate the mortgage market for the first time, explore options and may introduce you to lenders who you’ve never even heard of but have the best product for you and your circumstances.
6. If possible involve your family
The Bank of Mum and Dad is now considered the seventh biggest lender in the UK mortgage market because so many parents are helping their children stump up a deposit on their first home. Many mortgage lenders now offer products aimed at people whose family want to help them buy their first home. It could be a grantor mortgage – where a family member agrees to meet repayments if you can’t – or a joint mortgage where you buy a place with your parents. Alternatively, you could get a family or an offset mortgage where a family member puts their savings into an account that is used to reduce your mortgage costs. Or, perhaps your family can assist with a gifted deposit. A experienced mortgage broker can advise you on the best option for you.
7. Consider shared ownership
Shared ownership schemes are popular and offered by housing associations and private developers. You will own a proportion of a property – say 60% – and then pay rent on the remainder. However these properties are usually leasehold and you therefore have to pay a monthly service charge as well as contribute to major maintenance works. You can increase your ownership in further shares, but this can be quite complicated so make sure you ask questions on all the extra costs involved.
8. Check how the government can help
There are a number of government schemes to help first time buyers see below for details .
With the Mortgage Guarantee Scheme, from April, 2021, you can get a mortgage with just a 5% deposit. The 95% mortgage scheme will run for 18 months until December 2022. The scheme applies to all types of properties (new build and old) that cost less than £600,000.
Government Mortgage Scheme
Help to Buy
With a Help to Buy equity loan, the scheme lends you up to 20% of the value of a new build home you want to buy, interest-free for the first five years. You can borrow up to 20% of the value of the property, which means that you could buy a home with just a 5% deposit, and a mortgage for the remaining 75%. You must now be a first-time buyer and the new build home you buy must be within the relevant regional price cap.
Government Help to Buy Scheme
In June 2021, the government launched the First Homes Scheme. The First Homes scheme works by offering newly built homes to first time buyers with a discount of at least 30% compared to the market value of equivalent properties. This discount stays on the First Home forever. This means that, every time the property is sold, the new buyer benefits from the discount. The scheme has limited availability at the moment, so competition will be high and the scheme is not as accessible to all first time buyers in all regions.
Government guidance First Homes
If you would like a chat, advise or to book an appointment to view any of the above please contact us on 0208 743 1166 or firstname.lastname@example.org