Being a first-time buyer usually means forking out rent, saving for a deposit and playing catch-up with ever-rising house prices all at the same time. it is undoubtedly much harder to get a first-time buyer mortgage these days. However, there are a few things you can do to help and one of them is checking what help is available to you.
Back in May, we wrote a Blog covering all government schemes available to you as a first-time buyer in the UK. This month, we wanted to concentrate on available tax breaks;
- Help to Buy ISA: launched in December 2015 it is designed to boost first-time buyers’ savings pots. For every £200 you save into the account, the Government will add £50. This is up to a maximum bonus of £3,000 (which applies to £12,000 of savings). It’s important to note however that the Help to Buy ISA bonus cannot be put towards your initial deposit. Instead, the tax-free lump sum will be paid directly to the mortgage lender at completion. There are other limitations too, such as a £250,000 price cap on property the bonus can be used to buy. Bear in mind a Help to Buy ISA is a cash ISA, and you are only permitted to pay into one cash ISA in each tax year. However, you will be able to use your Help to Buy ISA savings in conjunction with any other Government scheme such as Help to Buy or Shared Ownership.
- Life Time ISA: The recently-launched Lifetime ISA offers a tax-free boost of up to £1,000 a year towards either buying your first home or saving towards retirement. Savers aged 18-39 can open one of these accounts and put away up to £4,000 each year. The Government will then boost returns by 25p for every £1 saved and pay the bonus directly into the account. You can opt to use your Lifetime ISA as a deposit on a property worth up to £450,000 anywhere in the UK, so long as you are a first-time buyer.
- Stamp Duty exemption: in the last few years the government has increased pressure on top end properties and second homes through increased stamp duty. The bottom end limitation of exemption was however kept in place and can be a great help. Your property must cost less than £125,000 to qualify which might be a stretch in certain areas. Indeed, according to Halifax, seven out of ten first time buyers now pay stamp duty. This is because the average first property has surpassed £200,000.
According to our research, these are the tax breaks available to you as a first-time buyer as we speak. However, it’s worth keeping up to date as politicians and property experts concluded that “the time had come” for a stamp duty review, warning that the impact of Mr. Osborne’s reforms of 2014 had been watered down by unprecedented house price rises.
Reforms or not, we are always happy to help at Spot on Mortgages. So, if you are looking to buy your first property, give us a call to book an initial, free meeting.
Your property may be repossessed if you do not keep up repayments on your mortgage.