2 minute read
LEGAL
First time buyers...
Are you looking for some help to get onto the property ladder?
The Government have initiated many schemes over the years to help first time buyers with that first crucial step onto the property ladder.
One of the most popular schemes is the current Help To Buy: Equity Loan, which, in various formats, has been helping homebuyers since 2013. This allows first time buyers to proceed with as little as a 5% deposit on a new build property (regional price caps will apply). The government will then lend between 5% and 20% of the purchase price. This means that buyers could potentially only have to fund 80% of the property price, 75% of which can be through a mortgage.
A key selling point for using this scheme is that the loan remains interest free for the first 5 years. At this point most buyers will then re-mortgage in order to pay this loan off, the amount of which will be based on the property value at the time.
This scheme will however, be coming to an end in March 2023, so FTB’s will need to get in quick and start securing their properties by October 2022.
If you do miss out on the deadline, don’t despair, there are other options: Lifetime ISAs The “LISA” is a savings account which can be opened between the age of 18 and under 40 in order to start saving for your first home. The Scheme allows you to save up to £4,000 a year and the Government will pay you a 25% bonus on your savings.
This ISA can only be withdrawn in certain circumstances, without incurring a financial penalty. One of these is for your first home… the property must be under £450,000 and be after 12 months of opening the account.
More information can be found on https://www.gov.uk/lifetime-isa.
Stamp duty relief The Government have also recently amended the stamp duty relief available for FTB’s. If you are buying for a value of up to £425,000 there will be no stamp duty payable. This has recently increased from £300,000.
They have also raised the limit for the value of the property in order to be able to claim FTB relief to £625,000 from £500,000. This means you can now buy a property for up to £625,000 and still be
able to claim relief on the first £425,000. After this value, no relief can be claimed. Shared ownership This allows you to buy a share of a property, whilst a housing association retain ownership of the remaining share. You will pay rent on the portion of the share that you do not own. You can often purchase further shares of the property, but be careful as not all shared ownership properties will let you staircase to a full 100% ownership. Be sure to also check that you can afford both the rental and mortgage payments each month. Gifts ABOVE ALL ELSE... YOU Another way to step on to the ladder is with the assistance of family or friends. You can use a gifted deposit to help obtain better mortgage rates. Please note MATTER MOST. that your conveyancer will need to do additional checks on any donors and this will be reported to potential lenders.
