Real estate tips for thrifty first time buyers

If you’re thinking about getting on the property ladder, there are a number of things you need to consider. Often, the sheer size of the investment buying a home takes can be intimidating – especially when you think of the number of years you’re on the line for a mortgage. The British education system doesn’t necessarily set you up for success in this regard. To help you sort through this muddle, we’ve distilled everything you need to know about buying property for the first time – and introduced you to some tips and tricks that can help you maximise your investment.

Help to Buy scheme

The help to buy scheme closed to new users in November 2019 but if you did manage to get your foot in the door before then, it’s a great way to get the most out of your savings. You can put up to £200 a month into your help to buy ISA and when the time comes to put a down payment on a house, the government will top up your account with 25% of what you’ve already saved – up to a maximum of £3000.

While the help to buy ISA scheme is now closed, you can look into a help to buy equity loan instead. The government will lend you 20% of the cost of a mortgage if you are buying a new build.

Return of 5% deposit scheme

Deposits have been rising throughout the coronavirus pandemic. Beforehand, you could reasonably have expected to fork out a down payment of 5%. In the months since, some potential buyers have been asked for as much as 15%. Lenders aren’t convinced buyers are going to be able to maintain the payments they’ve promised given the uncertainty of the current job market.

And a recent report showed that 45% of would-be first time buyers had their applications rejected.

But the Chancellor of the Exchequer’s latest budget has included a government-backed scheme designed to quell this rise. The government are offering to guarantee 5% deposit mortgages for lenders. It is hoped that these changes will make buying a home more accessible and increase the supply of homes available to meet demand. These kinds of mortgages are available on homes worth up to £600,000 and are not restricted to first-time buyers.

Stamp Duty

Rishi Sunak also made the decision to extend the stamp duty holiday. This reduces the amount of tax you’ll have to pay whenever you buy a home.

If you buy before 1st July 2021, you won’t have to pay any tax on properties worth up to £500,000. If you buy between 1st July 2021 and 30th September 2021, you won’t pay any tax on properties worth up to £250,000. And if you buy from 1st October 2021, you won’t pay any tax on residential properties worth up to £125,000.

For first time buyers, if you buy after 1st July 2021, you won’t have to pay any tax on properties worth up to £500,000.

Scanlans recommends taking advantage of these policies while you can. They are a sure-fire way to drastically reduce the amount of money you spend on your first home.

Show More