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Best Buying Options for First-Time Buyers After Lockdown

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19 October 2020 | Money Matters

Best Buying Options for First-Time Buyers After Lockdown

If there is one lesson we have learnt from the last few months, it’s that it’s important to have a space to call our own. During lockdown, we saw our bedrooms turning into offices, gyms, restaurants and meeting rooms overnight. So, it’s only natural that we are more motivated to save for a deposit and finally buy a home. Of course, buying a place for the first time is very exciting, but not everyone can afford to buy a property straight away.

There are many options available to first-time buyers, but they can be confusing at times. So, knowing and understanding your options, especially after lockdown, is essential. Here we have looked at all the opportunities for first-time buyers in the post-lockdown world.


The Stamp Duty Holiday

Stamp Duty (n.) = You pay Stamp Duty Land Tax (SDLT) when you buy houses, flats and other land and buildings over a certain price in the UK.


Rishi Sunak’s announcement that homebuyers would save on SDLT until 31st March 2021 offered a much-needed boost to the housing market. Particularly because it’s often the second biggest cost of buying a home after mortgage.


What it means is that, if you buy a property you will not need to pay SDLT on homes up to £500,000 whether you are buying your first home or have owned a property before. This will save buyers as much as £15,000.

The Stamp Duty holiday is good news for first-time buyers buying properties above £300,000 because they will be able to save more than before. Before the announcement, first-time buyers did not need to pay SDLT on the first £300,000 but needed to pay 5% on the portion between £300,001 - £500,000, so now they can save a large sum of money. Just to give you an example: if you buy an apartment now that costs £450,000, you will save £7,500 in taxes. To put that in context, that’s around 250 Nando’s dinners for two, or even better - brand new furniture.

You can use our Stamp Duty calculator here to see how much you could save.

London Help to Buy

London Help to Buy is available to those looking to buy in Greater London and is probably one of the most popular schemes. It’s the same as the current Help to Buy equity loan scheme, but with London Help to Buy, you could get up to 40% of the price of a new home funded by the government in the form of a 25-year equity loan. While there is a lot of information available about the Government’s London Help to Buy scheme, there are also many misconceptions about it.

London Help to Buy = The London Help to Buy scheme aims to help buyers who have a deposit of at least 5% to buy a new home up to the value of £600,000. The government will lend you up to 40% of the value of your new home via an equity loan, so you will only need to secure a 55% mortgage. The equity loan is interest-free for five years and you can pay it back at any time or on the sale of your home.

So, the idea is that you only need a 5% deposit to buy a property and the government gives you a loan of 40% in London, which can be repaid at any time within 25 years or on the sale of your home, whichever occurs earliest. The good thing about this scheme is that you don’t need to pay any interest on your loan for the first five years. This is great for first-time buyers, because the first few years can be some of the most financially difficult.

London Help to Buy myth #1: it’s only available to first-time buyers

No, this initiative is available to all home movers (not just first-time buyers) purchasing a single property who do not currently own another property in or outside of the UK.

London Help to Buy myth #2: I need to pay back the loan in 5 years

No, the Help to Buy equity loan is interest-free for the first five years. At the start of year six, you will have to pay 1.75% interest on the equity loan, rising each year in line with the increase in the Retail Price Index (RPI) plus 1%.


London Help to Buy myth #3: the scheme is due to end for first-time buyers in March 2021

No! Currently, the scheme is due to end for those who have previously owned a home on 31st March 2021. First-time buyers will be able to use it until 2023, but there have been calls for the government to extend it further.

Find out about our developments that are available with the London Help to Buy scheme here. You can always see how much deposit you need with Help to Buy using our Help to Buy calculator.

Buy a new build

First of all, new builds do have character – your own character. The biggest misconception about buying a new build is that they’re all the same. The thing is, it’s a blank canvas and it’s up to you how you turn that space into a home. New builds are also great for first-time buyers. Yes, they don’t come fully furnished, but if you buy an apartment now, with the Stamp Duty holiday savings you could furnish your new home and really make it your own. You’ll also have the peace of mind of a 10-year NHBC warranty. New builds are also highly energy efficient and have far lower maintenance costs than existing properties. You can find out about the benefits of buying new here.

Many of these schemes are jargon-heavy and can be confusing at times, so do get in touch with our Sales Team experts if you have any questions at all – we’re here to help.


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