What are the benefits of being a first-time buyer?

Eager to become a homeowner, but unsure whether now is the right time to put in an offer on that perfect property?

At UKMC, we understand that being a first-time buyer can be a daunting prospect, especially when you’re faced with rising house prices and sometimes, higher interest rates.

Fortunately, however, there are lots of first-time buyer benefits that can make stepping onto to the property ladder more of an exciting opportunity than something scary.

From improved access to money-saving government schemes and speedier sales, there’s plenty of benefits of first-time buyer that make purchasing your first property the ultimate affordable dream.

What are the biggest first-time buyer benefits?

Looking for an undeniably good first-time buyer incentive that’ll encourage you to become a homeowner?

To help you understand the help that is available to you as a first-time buyer, the expert mortgage advisors at UKMC explore some of the best first-time buyer benefits in the UK.

Stamp duty relief

As a first-time buyer, you are entitled to stamp duty relief when you purchase a property. As of September 2022, first-time buyers don’t have to pay any stamp duty for properties with a value of £425,000 or less.

If the property is valued between £425,000 and £625,000, you will be required to pay 5% on the remainder. However, for properties with a purchase price of more than £625,000, you will not be entitled to this relief at all and will need to pay the standard rates.

To claim this relief, you must also intend to live in property with it being your main residence, which means it mustn’t be a Buy To Let property.

It’s also worth bearing in mind that if you’ve owned a property previously (for example, through inheritance) or the person you’re buying with has owned a property previously), you won’t be eligible to claim stamp duty relief.

Big savings with the Shared Ownership Scheme

Aimed at individuals that can’t afford the deposit and mortgage repayments to buy a property that meets their needs, the Shared Ownership Scheme can help first-time buyers to save money by allowing them to purchase just a proportion of the property.

They can buy anywhere between 10% and 75% of the home’s market value, while paying the remaining sum through rent to the landlord or provider. Ultimately, this means you need less money to buy and you’ll also benefit from the loan being interest-free for the first five years.

However, there are more eligibility restrictions on this scheme than other government schemes for first-time buyers, so it’s important to do your research to ensure you’re eligible and this scheme works with your particular needs.

Half price properties with the First Homes Scheme

Launched in June 2021, the First Homes Scheme allows first-time buyers to buy properties for 30% to 50% less than their market value. This scheme also comes with a stricter eligibility criterion and in many cases, key workers, locals, and those on lower incomes are prioritised.

It’s also important to bear in mind that this scheme is only available in England and for certain properties. For example, new home properties that have been built by developers.

Not to mention, you can only sell the home to another eligible first-time buyer at the same percentage discount you received according to the value of the property at the time of sale.

Increased likelihood of a swifter sale

There’s a reason that existing homeowners are eager to encourage first-time buyers to purchase their property – the smaller buying chain! As first-time buyers, you don’t need to worry about finding a buyer to purchase your own property.

Instead, you’ll benefit from greater flexibility with move-in dates as you’ll either rent a property or live at home. As a result, quicker completions become more likely when you’re a first-time buyer and the chances of sales falling through are also reduced.

Not only does this help to limit stress on all involved parties, but sellers may even consider accepting a lower offer from a first-time buyer for these attractive reasons.

Lower deposits with the Mortgage Guarantee Scheme

Introduced in 2021, the Mortgage Guarantee Scheme has increased the amount of 95% loan-to-value (LTV) mortgage deals on the market. Put simply, this means first-time buyers need only a 5% deposit to purchase a property, instead of the more typical deposit of between 10% and 20%.

This means renters who were struggling to afford rent and save enough money can now get onto the property ladder sooner.

Boosted savings with the Government Lifetime ISA

This Individual Savings Account (ISA) was designed by the government to replace the Help to Buy ISA which ended November 2019. For first-time buyers aged between 18 and 39, it can be used to help you purchase your first home as you can contribute up to £4000 each year.

The government will then add a 25% bonus to (up to £1,000), leaving you with a maximum of £5,000 in this account each year and you won’t pay tax on any interest your savings make. These savings can then be put towards the purchase of a property priced at either £450,000 or less when using a mortgage.

However, you must wait at least 12 months after your first Lifetime ISA payment to use this money for the purchase of a property. Plus, you must also use a conveyancer or solicitor as the Lifetime ISA provider will only release the funds to one of these professionals.

(All information on these first time buyer benefits were correct at the time of posting this article. February 2024)

Explore the benefits of being a first-time buyer with UKMC

Now you have a clearer idea of some the different first-time home buyer benefits available in the UK, why not book your appointment with one of the expert mortgage advisors at UKMC to learn more?

AT UKMC, we take the time to understand your specific financial circumstances and personal preferences to help you choose the right mortgage deal for you.

Whether you need support with understanding gifted deposits, no-deposit mortgages, or any of the government schemes for first-time buyers, we can help.

If you’d like to learn more about the mortgage advisor services for first-time buyers available at UKMC, please feel free to contact our experienced team today. You can either speak directly to one of our expert mortgage advisors by giving us a call on 01925 573328 or book your own appointment directly here.

UK Mortgage Centre is a Trading Style of The UK Mortgage Centre Group. The UK Mortgage Centre Group is authorised and regulated by the Financial Conduct Authority – FRN 826982. Registered in England & Wales: 11614569. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages. The Financial Conduct Authority does not regulate will writing and taxation and trust advice.