We see a lot of people who are currently hesitating about whether not to take the plunge and become a first time buyer. So, I thought it would be good to take a quick walk through the benefits of getting on the property ladder.
Are first time buyers in a good position?
Well, the short answer is, actually there are some very good reasons to become a first time buyer right now. The longer answer is that, as always, this is a general article and I can only overview the situation. You need to take advice so we can assess your personal situation to be confident of making the right decision.
Before we look at specific benefits and options it’s probably worth taking a moment to remember that owning a home has been a good idea for centuries now and that seems unlikely to change. Getting on the property ladder may seem like an uphill struggle at times but paying rent is not helping you save for the future and owning property is still likely to be one of the safest long-term investments there is.
That is a long way from the full story though because right now there are a lot of schemes, offers and other support around to incentivise first time buyers. So, if you have never owned a property anywhere, not inherited property and not purchased property before, here are a few things to think about.
- There are some great deals. Whatever the ups and downs of interest rates, economies and the general property market, one thing always stays the same. The lenders make their money out of, well to state the obvious, lending. As the market changes the mortgage offers change with it and at the moment there are some good ones available to first time buyers.
- Stamp duty relief means you will probably pay no tax on up to the first £425,000 of the cost of your new home. At the moment we have no idea how long this will last, but for now it is a significant cost saving.
- Part ownership could be an option. There are several routes to part ownership through local councils and housing associations. How these usually work is you will buy a percentage of your home based on what you can afford and then you pay rent on the rest. The council or housing association will retain ownership of the rest of the house. These schemes can be really effective when it comes to getting on the property ladder for a lower initial outlay. Most of these kinds of schemes will also contain the useful option to ‘staircase’ which allows you to increase the amount of the home you own as time goes on.
- Equity loans could get you started. The idea behind an equity loan is that you borrow 20% of your purchase cost, interest free, for the first 5 years. After that you pay interest on the loan though, so you need to budget well ahead.
- First homes scheme could be an option. With this scheme you could be able eligible for a discount on a new build. Eligibility varies region to region so you need to check what your local requirements are. Common eligibility requirements are things like being an essential worker and/or already resident in the area as well as income levels.
- One benefit of being a first time buyer that people sometimes forget is that you are in a very strong position from the seller’s point of view. When a house is being purchased as part of a chain it can sometimes become a little convoluted. If the circumstances change for one seller it can cause disruption up the chain. In the case of a first time buyer, once you have your agreement for a mortgage and had your offer accepted, that is the big hurdle done. It requires something exceptional to change your circumstances, so the seller is more confident that the sale is all finished bar the paperwork on your side. If you happen to find a motivated seller who is ready to move, then you will be able to leverage your first time buyer status even more.
Finally, the biggest benefit we see for first time buyers is the change in lifestyle. Finally moving out of your parents’ house or letting go of that rented property to move into your own home, is a moment we all look forward to. One of the absolute pleasures of being involved in property and mortgages is seeing first time buyers succeed in getting their own place.
Call us and let’s explore your options, there may be more of them than you think and the deals and offers could well be a lot better than you expected.