First time buyers often struggle to buy a house or flat. Fortunately, there are a number of ways that you can improve your chances to get on the property ladder. At the time of writing, there are 4 government schemes which are particularly helpful to first time buyers.
Help to Buy ISA
Even if you don’t want to buy a property now – or in the next ten years – a Help to Buy ISA can bring your dream of one day owning your own home that much closer. An standard ISA lets you put aside a certain amount of money each year to save tax-free. A Help to Buy ISA goes a step further: not only is the interest you earn tax-free but the government will also give you a bonus of up to £3,000. There’s a catch of course: you only get to keep the bonus if you use the money to buy your first home. On the plus side, you can save any amount per month, and as long as you meet the criteria when you take the money out, the government will give you a 25% bonus, up to £3,000.
Help-to-Buy Equity Loan
This scheme reduces the amount you need for a deposit by letting you fill the gap by borrowing from the government. It’s available on new-build homes costing up to £600,000. You will still need a 5% cash deposit, and will still have to pay other fees and taxes as required, but it can mean the difference between being able to buy and not. If you are eligible, you can borrow up to 20% of the value of the home from through this scheme, or 40% if you are buying in London.
An alternative to the Help-to-Buy Equity Loan is Shared Ownership. Through this scheme, you purchase a portion of the property (for example, 25, 50 or 75%) through the usual method of a cash deposit and a mortgage. The remainder is owned by a company or housing authority to whom you pay rent. You can treat the property as though its your own (e.g. redecorating) and will have the option to buy the remainder at a later date. Only a limited pool of properties are available for Shared Ownership; these are typically new builds or former Housing Authority properties. There are also other restrictions, so be sure to check your eligibility before setting your heart on a particular home.
No stamp duty
If you (and anyone you are buying the property with, such as a spouse, partner or parent) are a first time buyer, then as of 22 November 2017 you no longer have to pay stamp duty. As stamp duty is paid on properties over £125,000 and varies from 1-12% this can mean a saving of thousands of pounds.