Over the last few months there has been movement to assist first time buyers. Some of the information can be confusing therefore our blog aims to help you focus on what you may need to consider.
As first time buyer you are bound to have a plethora of unanswered questions racing around your head such as, how much should I save? Can I afford my mortgage repayments? Will there be unexpected costs? We aim to answer a few of those questions here and help to put your mind at rest, making the whole process a little less stressful.
How much money do you need to save to buy a house?
Saving for your house deposit can seem like a daunting task. Typically, a deposit of at least 5% of the property’s value will be required however, most mortgage providers prefer anything up to 20%. So, if you have £7000 saved up, you’d look for a house valued up to £140,000.
The size of your deposit is imperative to securing a favourable mortgage deal. Although putting down a 5% deposit seems a lot more feasible now it can be harder and riskier in the long-run due to bigger mortgage repayments and rising interest rates.
Things to consider when buying a house for the first time
As well as ensuring you have enough money for your deposit, there are many other costs that come with buying a house, such as:
- Solicitor’s fees – We can help!
- Mortgage fees
- Stamp Duty
- Surveys and valuations
These costs all add up so work out an estimate and take them into account when budgeting.
Do I have to pay stamp duty as a first-time buyer?
You may be aware of the recent Government changes to Stamp Duty Land Tax. Chancellor Philip Hammond abolished Stamp Duty for all properties up to £300,000. bought by first time buyers. If the purchase price exceeds £300,000 but is less than £500,000, you will pay 5% on the amount above £300,000.
Can the Government Help?
There are a variety of schemes for first time buyers to take advantage of to help them take the first step onto the property ladder, such as the Government’s Help to Buy scheme. The Guardian recently reported that the Help to Buy Scheme has been given a £10 billion boost, providing financing until 2021.
With a Help to Buy Equity Loan, the Government will lend you up to 20% of the value of your newly built home, meaning that you only need to get together a 5% deposit. One advantage of this scheme is that you won’t be charged any interest on the 20% loan for the first five years. However, if the property increases in value you still need to pay back the same percentage that you borrowed. This means that you can end up paying back a lot more than you originally anticipated. Further information about the various schemes available can be found here https://www.helptobuy.gov.uk/
If you are a first time buyer and looking to purchase a property, please do not hesitate to contact our expert property team free on 0808 1685 643 or email us on getmoving@ramsdens.co.uk