To qualify as a first-time buyer, you must have never acquired a major interest in a residential property or an equivalent interest in land situated anywhere in the world.

Why does it matter if you’re a first-time buyer? Because first-time buyers currently receive coveted Stamp Duty relief and are eligible for certain schemes. These benefits can make a real difference to the costs you face when buying a home – but obviously, not everyone qualifies as a first-time buyer.

It doesn’t matter whether you purchased the property alone or with others – if you purchased the property with other people then you all need to meet the first-time buyer criteria.

You won’t qualify as a first-time buyer if:

• You previously inherited or were given a property as a gift
• You previously acquired a property through a financial institution on behalf of a person under an alternative finance scheme
• You were added to the title deeds of a property someone else purchased

However, you may still qualify if:

• You previously acquired a property as a trustee, unless you’re also a beneficiary of the trust
• You own or previously owned non-residential or mixed-use property, but only if the property does or didn’t include dwelling
• The interest you acquired was the grant or assignment of a lease with less than 21 years to run

You have to save up for a deposit if you want to take out a mortgage. First-time buyer deposits are typically 5% – 15% of the total market value of the property but can be more.

The amount you’re able to put down in deposit helps determine how big of a mortgage you’ll need. The bigger your deposit, the less you need to borrow from the lender and the less you’ll have to pay in interest. Larger deposits usually give you access to more competitive mortgage rates because they result in a lower LTV, which gives the lender more security so they can consider charging a lower rate of interest. Read more about deposits in our Deposit Guide.

There are some mortgages where the buyer doesn’t have to put down any deposit; these have sometimes been called 100% mortgages. The name is misleading as your parent or other relative still has to provide something in place of a deposit, like cash savings or the equity in their own home. If this sounds like something you’d like to consider, then call us on 01634 968111 and speak to an adviser who’ll explain your options in more detail.

Whenever you hear about first-time buyers, they’re usually at the centre of some big scary story about how they’re struggling to get on the property ladder.  Property values – and therefore deposits – have increased, so there’s no debate that buying a home is more expensive than it used to be.However, there are actually some nice benefits to being a first-time buyer.

Stamp Duty Exemption

Stamp Duty is the tax paid on residential property purchases. As a first-time buyer, you typically pay less Stamp Duty than everyone else. The amount you’ll pay ultimately depends on the value of the property you’re purchasing.

• On Properties up to £300,000 – You’ll pay £0 Stamp Duty Tax.
• On Properties up to £500,000 – You’ll pay 5% Stamp Duty on a property worth over £300,000. The 5% will only be payable on the amount from £300,001 – £500,000, unless you’re buying a shared ownership property. In this case, you won’t pay any Stamp Duty on a shared ownership property worth up to £500,000.
• Over £500,000 – If you’re buying your first home and it’s worth more than £500,000, you won’t receive any Stamp Duty relief. It doesn’t matter whether you take part in a shared ownership scheme or not – you’ll pay Stamp Duty at the standard rate. We explain how the different rates work in more detail in our Stamp Duty guide.

Help in Raising a Deposit

There are 2 government schemes which offer support in building up a deposit. There are the Help to Buy: ISA and Lifetime ISA. They’re both a type of savings account where you store money you want to put towards your deposit. This isn’t all they’re useful for though. With ISAs, the government gives you a bonus that’s a percentage of the amount you contribute to the account. The bonus isn’t a loan – you don’t have to pay it back.

Help to Buy: ISA (No Longer Available)

The Help to Buy: ISA is only available to first-time buyers purchasing a property worth up to £250,000, or £450,000 in London. You put up to £200 into a savings account each month and the government adds a 25% bonus. You can receive a maximum bonus of £3,000 towards your deposit.

You can no longer apply for a Help to Buy: ISA as the scheme is now closed to new applicants. The deadline for new applications was the 30.11.19. However, if you took out a Help to Buy: ISA before the 30.11.19, you can continue putting up to £200 per month into your ISA until November 2029 and will still be able to claim the government bonus to use towards the purchase of your first property. You must claim your bonus by 01.12.2030.

Lifetime ISA

You can take out a Lifetime ISA if you’re 18 – 39 years old and you’re either a first-time buyer or saving for retirement. It’s like a Help to Buy: ISA, except that it’s also used by people saving for retirement and you can only use your savings to buy a property that’s worth up to £450,000. You can save up to £4,000 a year and the government will add a 25% bonus, i.e. a maximum of £1,000 a year.

The maximum contribution you can receive from the government is £32,000, but this would only be possible if you took out the ISA at 18 and continued to put in the maximum of £4,000 each year until you’re 50 years old.

Help with Low Deposit

There are some additional costs that come with buying a property for the first-time. It’s best to be aware of these from the outset, that way you won’t get any nasty surprises along the way. We’ve provided an easy to understand breakdown below.

Stamp Duty Tax

As we explained above, you’ll only pay Stamp Duty as a first-time buyer if you’re purchasing a property worth over £300,000 – and even then you’ll still receive some relief, unless the property is worth over £500,000.

Valuation/Survey

Your mortgage lender will need to confirm the value of your property before they lend you money. While your mortgage application is being processed, the lender will arrange a valuation for lending purposes.  Some lenders might not charge you for this, depending on the type of mortgage product you select.

You might need a survey in addition to a valuation for lending purposes. There are 2: a homebuyer report and a full structural survey.

Part of a homebuyer report includes a valuation, but the difference between a homebuyer report and valuation for lending purposes is that the surveyor also prepares a report for you on the state of the property. This report identifies any work that might be necessary both immediately and in the near future.

A full structural survey is much more detailed and is only really necessary if you plan on doing extensive work to the property, it was built before the 1900s, it’s of unusual construction, or if you feel that there might be problems with the actual structure – e.g. if it’s had underpinning due to subsidence in the past.

Legal/Conveyancing

It’s unsurprising that there are a lot of laws and legal requirements involved in buying a house. You’ll need a good conveyancer or solicitor to guide you through the minefield of contracts and ticks in boxes. Your conveyancer or solicitor will also represent you by liaising with the seller’s solicitor, that way they can make sure everything is completed on schedule and your purchase goes smoothly.  Conveyancing fees can vary quite a bit, so it’s worth asking for several quotes if you want to keep the cost down.

Mortgage Broker Fee

A mortgage broker manages your entire mortgage application. At The Residential Mortgage Hub, we not only guide you through the application process, fill out the paperwork and find the best rates for your needs and circumstances. Our purpose is to make buying your first home what it should be – enjoyable.

Removal Fees

You’ll usually have to pay removal fees to transfer your possessions from your previous residence to your new one, so you may need to budget for this.

Now you know a bit more about what’s involved in buying your first home, you’re ready to learn about the process you’ll go through.

• Speak with a Mortgage Broker

They’ll help you establish how much you can potentially borrow and which type of mortgage would suit you. Your adviser will make a mortgage recommendation and, if you’re happy to proceed, will go about securing your DIP (Decision in Principle). Your DIP is a promise from the lender that they’ll grant you a mortgage for that amount, on the condition that the information you’ve given is correct.

• Find a Property

Once you know how much you can afford, you can start the property search. It’s worth speaking to multiple estate agents as they’ll have different listings. Remember to ask questions about the local areas and the condition of each property.

• Put in an Offer

When you’ve found your dream home, you’ll want to make an offer.  As you’ll have secured your DIP at this stage, you’ll be in a great position to put an offer on a property. Once your offer has been accepted, you can proceed with your application.

• Make a full mortgage application

Your mortgage adviser will take you through the full mortgage application process. It’s also during this period that the lender organises a mortgage valuation.

• Conveyancing

The solicitors/conveyancers will draw up contracts for the purchase and check everything is correct. They look for onerous clauses in the title deeds and check any leases for things that might cause problems in the future.

• Exchanging contracts

Your solicitor and the seller’s solicitor will now exchange contracts. You won’t have paid for the property at this point, however you’ll have legally agreed to buy it on a specified date. It’s at this point that you hand over your deposit money.

• Completion

Completion takes place once you’ve exchanged contracts and paid for your new home in full. Money is transferred to the seller’s solicitor and the keys are released to you.

The time it takes from that first, initial application to completion varies on a case-by-case basis.