First time buyers shrug off Brexit as Help to Buy government schemes, Stamp Duty exceptions and cheap mortgage deals boost home buying

A growing number of first-time buyers are shrugging off uncertainty surrounding Brexit and following their dreams, to owning their own home. Help to Buy schemes, stamp duty exemptions and cheap mortgage deals are giving new buyers the boost they need to get on that all-important property ladder. In November, there were 36,200 new first-time buyer mortgages completed marking 5.8% increase from the same point a year earlier UK, according to UK finance. The first-time buyer market is finally booming, with £6 billion lending providers to first time buyers in November alone.

The average loan taken out by first-time buyers in November was £142,000, up from £138,000 in November 2017 and the average first-time buyer is 30 years old with a household income of £42,000. The recent research into the market shows first-time buyer demand and actively has held up surprisingly well, with aspiring buyers clearly not losing the ambition to purchase their own home, despite the Brexit uncertainty. So it could actually be the best time for potential homeowners to make their move, given the strong appetite to lend in this part of the market and there is some very attractive pricing available, with very low interest rates.

These figures show Brexit uncertainty hasn’t prevented first-time buyers from grasping the opportunity to step foot on the housing ladder. The reality is that there are good deals to be had and many first-time buyers are taking advantage of government schemes such as Help to Buy. Introduced in 2013, Help to Buy programs allow first time home buyers to qualify for mortgage loans by making down payments as small as 5%.

Check out our top tips below, so you can join hundreds of first-time buyers jumping on the property ladder this year. 

1. Save long and hard for that deposit If you’re planning to buy a home, you’ll need to save for a deposit. – Open a Help to Buy ISA. As long as you‘re over the age of 16 and have a National Insurance number, you can take advantage of a tax-free savings account aimed specifically at buying your first home. The government will even give you a 25% bonus once you’ve made the purchase .

– Take advantage of stamp duty exception. Being a first-time buyer means the government will wave your tax for purchasing. As long as your property costs less than £300,000, you can save a significant amount. Don’t forget though, you’ll still need to pay solicitors, surveyors and financial advisors.

2. Seek professional financial help advice Buying a property can be very daunting for a first time buyer. It can become quite confusing, so it is highly recommended that you seek expert advice to help you through the process.

– Work out what you can afford to buy. Mortgage advisors are able to tell you how much you can borrow and therefore how much you’ll be able to spend. If you don’t find this out before viewing, you could be looking at properties out of your budget.

– Show vendors and estate agents that you’re ready to buy. If you’ve already understood your options, you’ll appear much more convincing to those selling and lending to you. That means you’ll be much more likely to close a deal when you find the right place for you. – Get certainty from your mortgage lender. Having all your finances set out by an advisor before you approach a lender will better your chance of them offering you a firm mortgage offer.

3. Decide on your monthly mortgage payments Your current situation will determine how much you can afford to pay on your mortgage.

– If your already renting, you will be used to paying out every month. It’s likely that your mortgage payments will be cheaper than what you’re currently paying. As an added bonus though, your payments will help you call the property your own.

– If your living with family, the costs might come as a shock. Its important to make sure you’ll have funds to manage a new monthly expenditure before you go ahead with your purchase.  

4. View lots of properties There’s a lot to consider when it comes to choosing your property. Having an idea of what your after will make your search more efficient.

– Decide what kind of home you would like. Whether it’s having a garden, or driveway, then you need to decide what priorities must be met. Be clear on whats most important to you, so you can shortlist properties accordingly and not waste any time.

– Prepare to be flexible. Its normal to change your preferences once you start visiting properties. Keep an open mind and don’t be deterred if you fall for a place that isnt quite what you were expecting.

– Thinking about renovating. For some, redecorating a property is a chance to make to a home. But you not have the funds or time to do this. Keep in mind the work that will need doing when you view.

5. Make an offer You’ve set priorities, sought financial advice and found your ideal home. Now its time to make an offer.

– Don’t be afraid to haggle. It’s nearly always the case that the price agreed is different from the price advertised. Negotiate with your estate agent and vendor so that you get the best deal possible.

Important things to know about Help to Buy ISAs in 2019

The Help to Buy ISA was launched on the 1st December 2015 and runs until the end of November 2019, with all bonuses having to be claimed by the 1st of December 2030. With just under a year left to open and start saving, now could be a good time to consider one. They offer an alternative to taking out a loan to help fund an initial deposit for your first home along with other benefits, with the way they work and how you can take advantage of them.

How do they work?

Help to Buy ISAs work in a similar way to regular ISAs, the only difference is, the government will top up any contributions made by 25% (up to a limit of £12,000). A minimum amount of £1,6000 is required to qualify for a government bonus and you can start with a deposit of anything up to £1,000. After the initial deposit has been made you can only save up to £200 a month, so you can’t simply transfer £12,000 across, for example. Then when it comes to buying your first home with the ISA, 25% will be added to it as long as its between the minimum and maximum contributions.

Qualifying Criteria

In order to open and use a Help to Buy ISA you simply need to be a first-time buyer over the age of 16. The good news is that they are available to each first-time buyer and not each home, so if you have a partner or want to buy a property for a friend, you can combine savings and get up to £6,000 from the government towards your home. Any home worth under £250,000 (or 450,000 in London) is eligible and it can be used with any mortgage, not just a Help to Buy one.

Limitations to Help to Buy ISAs

Within all the criteria mentioned, there are a few further restrictions. Help to Buy doesn’t work if you are wanting to buy a property overseas or open more than one. Technically you can’t buy a property and rent it out with one, but if your circumstances change and you have to work away, for example, you will be able to rent it out.

Should I open one in 2019

Any first time buyers will be looking into getting a good financial position before purchasing a property by ensuring they fulfil their financial obligations. If you are considering buying a house in the years should seriously consider open one. As long as you meet the qualifying criteria and open one before the 2019 deadline then theres little reason to not open a Help to Buy ISA.

Property to buy: Top saving tips for first-time buyers revealed

PROPERTY TO BUY: Saving for a first home can seem impossible, especially with rising house prices. However, new research has revealed the top saving tips for first-time buyers looking to purchase a new home.

Top tips and tricks for buying a new property

Property to buy is on the minds of many Britons, with many people looking to buy a home for the first time. It’s a long and often difficult journey, with saving for a deposit seeming like an almost impossible task. New research from the Post Office Money has now revealed the easy ways first-time buyers can successfully save for a first home. According to the research it takes first-time buyers four years of adjusting and scrimping to be able to save for their first home, with these tips helping along the way.

Top tips for people saving towards their first home

Cut back on the essentials

According to the Post Office, the easiest (and most common) way people manage to set more money aside when saving for their first home is finding ways to cut down on their day-to-day spending. This could be as simple as switching to supermarket basic brands, comparing energy and mobile providers to see if you they could reduce your their bill or even seeing if it’s possible to reduce their rent by moving to a less expensive property.

Map out a deposit goal and stick to it

This is important particularly if putting aside money with a partner – very few people save without assistance from their loved ones and first-time buyers will often be planning to purchase their home with a partner.

When saving money, be sure to agree on how much both partners can commit to save realistically on a monthly basis and hold each other accountable, so it’s more difficult to splurge.

Look for tools that may help, as there are a range of apps and calculators freely available to help plan a savings journey, such as the Post Office online tool.

Can savings be spread out over a longer period?

If the goal seems out of reach, consider how to reduce the pot needed to save, such as buying a smaller property, looking at a different location or considering no-deposit mortgages.

Have an honest conversation with loved ones about financial support

It’s common for first-time buyers to get some degree of financial support from their families as they attempt to get on the ladder. The research actually showed that more than half will do so as they attempt to pull the money together for their first home. When asking for money, be sure to have an open and honest conversation about the terms of the agreement. If they are providing a gift or a loan and if it’s a loan, be clear on what they expect in terms of regular repayments.

Keep an eye on how affordability shifts and incorporate that into any plan

According to the Post Office, four years is a long time in our uncertain housing market and buyers want to make sure they are aware of how things shift while saving. You also need to keep up to date on all of the government Help-to-buy schemes. Up until 2023 first time buyers participating in the scheme, you only need a 5% deposit, with the government lending 20 % of the costs and the rest is made up with a 75% mortgage. You wont be charged fees on the 20 p% loan for the first five years. See below for all Fortitudo’s developments associated with Help to Buy.

Developments associated with Help to Buy

• The Highlands, Fareham

• West Quay Road, Southampton

• Commercial Road, Poole

• Willow Park, Havant

• Statum, Bournemouth

• Canaway Court Poole

Learn why the property development industry is an important aspect to the affordable housing crisis

Affordable housing is fundamental to health and well-being of people and to the smooth functioning of economies. Over time it has become increasingly difficult for developers to gain planning permission for different sites around the UK due to a slowing in process from council job cuts and development feasibility becoming more challenging. In addition to this traditional lenders are increasingly reluctant to approve loans to developers, and this is having the biggest impact on small to medium (SME) property development companies.

It needs to be highlighted that developments always deliver affordable housing, where viable due to a clause in the section 106 affordable housing act. It is a planning legislation which requires developers to include a portion of affordable housing in their developments, which is then often sold to housing associations. It is the primary driver of affordable housing delivery, with 45% of housing association homes (14,437) developed using the mechanism in 2016/17, according to figures complied by the nation housing federation.

The importance’s of small developers in helping address the imbalance between housing demand and supply cannot be understated, and off course the push for affordable housing which is given to the government. Policy and initiatives designed to encourage SME developments to achieve their maximum output new build homes are needed. Doing so ensures the UK effectively uses its available resources, increasingly the housing stock and making the property market accessible for prospective home buyers.

What can the government do to narrow the housing-affordability gap?

Unlock the land supply is an important aspect to narrowing the affordable housing gap. Land is one of the largest property development expense and securing it at an appropriate location can be difficult. In the largest global cities, many parts of land remain unoccupied or underused. Some of them may belong to government and could be released for development or sold to buy land for affordable housing. Reducing construction costs would encourage developers to challenge bigger project, which is turn would lead to more affordable housing, so the obvious solution is to allow taller buildings.

Lowering financial costs for buyers and developers, will lead to improvements in underwriting would help make banks safely make more housing loans to lower income borrowers. Governments could help cut the financial costs of developers by making affordable housing projects less risky by guaranteeing buyers or tenants for finished units.

Current market revealed: First time buyers are driving the housing markets

Just in August alone there were 35,000 first-time buyer mortgage applications completed, which is one of the best months this year, and 2% higher than the previous year. Experts said people that are taking their first step on the property ladder are benefiting from continued low interest rates, a good choice of mortgages and government policies aimed at giving the sector a helping hand. Furthering this stamp duty was cut for first-time buyers in 2017, leaving buyers with more money for better homes.

Buy-to-let mortgages have helped to transform the concept of housing in the UK over the last few decades. They represent one method by which rental housing can be transformed into an investable asset. Data from Savills 2018 shows the average rate for five-year buy-to-let mortgage could be an appealing prospect for many landlords, especially at such attractive rates and range of mortgage products available and will continue to grow, more than doubling over the past year. Property website Rightmove said that first-time buyers are in the best time to negotiate deals this autumn. Rightmove has also seen a softening in asking prices for properties with two bedrooms or fewer – the usual target market for both affordability-stretched first-time buyers and buy-to-let investors.

Overall the house purchase completions remain stable, driven largely by the number of first-time buyers which reached its highest monthly level since June 2017. First -time buyers generally are benefiting from low interest rates and more choice in the mortgage market, as well as schemes such as Help to Buy. Lenders continue to offer competitively-priced high loan-to-value products to attract first-time buyers and with property prices softening in some areas, there are good opportunities for those trying to get on the ladder for the first time.

It has never been a better time to buy, grab your opportunity now. At Fortitudo we strive in making it possible for first time buyers to get themselves onto the property ladder. Many of our developments are associated with Help to Buy, to kick start your journey to owning your own home. For more information on our latest developments, please visit out website.

5 things you need to know about the Help to Buy equity loan

  1. First time buyers

The scheme begun helping first time buyers back in April 2013, and since there has been over 169,102 competitions to March 2018, of which 81 per cent of these were first time buyers  and around 13,000 of these were based at London properties. The value of these properties is estimated at £42.23 billion, according to the Ministry of Housing, communities and Local authority.

  1. Equity Loan

The Help to Buy equity loan scheme supports those with a low deposit looking to get onto the property ladder. This is completed by combining a 5% deposit from the buyer, a government loan of up to 20% of the property value, which is interest free for the first five years, and a 75% mortgage. There is also a scheme for those looking to buy in London.

  1. Re-mortgaging

It is possible to re-mortgage with an equity loan in place, but it depends on the circumstance of the homeowner. There are a number of moving variables that will affect how easy it is to re-mortgage. This includes the mortgage loan itself, how much the property value has risen or fallen, whether the homeowner has any equity to put in and how much income they receive.

  1. Selling up

This follows the same process as any other property sale, however, at the point of sale, the homeowner will have to repay the equity loan in full to the Home and Communities Agency. The amount of paid back will be the same as the amount burrowed, unless you sold after the 5 year mark, then interest would start to occur onto off your equity loan.

  1. Alternatives

The Help to Buy equity loan is not for everyone, and there are many different ways for first time buyers to get on the housing ladder, such as the shared ownership scheme. This allows people to buy a share of between 25% and 75% of a property. A mortgage will be paid on the share the homeowner owes, with a subsisted rent on the remainder being paid to the relevant housing association.  Whilst shared ownership makes mortgages more accessible for those on a lower wage, homeowners still have to pay 100 per cent of the ground rent and service change on a property. Homeowners do have the option to buy a greater share of the property in the future, this is a process called stair-casing. However a stamp duty charge will be charged on the whole value of the property and will have to be paid once the shares equal or exceeds 80%.

Autumn Budget 2018: New Help to Buy scheme to be launched for first time buyers

On Monday it was announced from the government that a new Help to Buy equity loan scheme for first-time buyers will be launched in April 2021. The scheme will feature regional price caps, and come alongside reforms to stamp duty for shared ownership users, capital gains tax changes for landlords and extra funding for house builders. It has enabled developers the visibility needed to plan their land purchase requirements, and while the government has stated that there will be no extension after 2023, these schemes have already been extended twice.

New Help to Buy scheme for first-time buyers

The current help to buy equity loan scheme is due to end in March 2021, a new version will be launched with regional price caps. The scheme, which will run for two years until March 2023, will only be available to first-time buyers.

The new scheme will have a higher price cap, which will be 1.5 times the current average first-time buyer price in each region. With South West capping at £349,000 and London at the maximum of £600,000. The government says it has no plans to continue offering Help to Buy equity loans after March 2023.

£500m for housing infrastructure fund

Given that the major house builders cannot make up the shortfall in housing the British Business Bank will provide guarantees on up to £1bn of loans to small and medium sized builders, with an additional £653m going towards strategic partnerships with nine housing associations. The budget announcements also included a further £500m for the housing infrastructure fund, to unlock up to 650,000 new homes. The government has also agreed to reduce planning restrictions in order to make it easier to convert shops into homes.

First-time buyer stamp duty cut extended to shared ownership

The government will also extend stamp duty relief to first-time buyers purchasing shared ownership homes priced up to £500,000 backdated to include those who have bought since 22nd November 2017.

Currently, buyers who use a shared ownership scheme can either pay duty on their share of the property (if it costs more than £125,000 threshold) or on the whole value of the property (including the portion they haven’t bought yet but may buy further down the line.

Under the current system, those who chose the former would previously have missed out on the first-time buyer stamp duty relief. So, assuming you’re buying 50% of a home priced at £350,000 and only plan to pay stamp duty on your initial share.

– You share costs 175,000, meaning you’d need to pay stamp duty on the amount over £125,000 threshold, that’s £50,000.

– On this £50,000, you’ll have needed to pay stamp duty at 2% that’s £1,000.

Under the new system, the buyer wouldn’t need to pay this £1,000 charge. The cut to stamp duty for first-time buyers was originally announced in last years budget, and the chancellor says it has so far helped 121,500 buyers.

Non-resident stamp duty collection

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-resident buying a home in England and Northern Island. Whilst stamp duty relief has also been extended, backdated to November 2017, on first-time buyers purchasing shared ownership homes, with an upper limit of £500,000.

Capital gains tax changes for landlords

The Chancellor says that the government will improve private residence relief on capital gain tax. From April 2020, letting relief will be reformed so that it will only apply when the owner of the property I in shared occupancy with the tenant. The landlord capital gains tax exemption on the final 18 months before a property is sold will also be cut to nine months. These changes will be subject to a consolation

What options are there to get yourself on the property ladder?

Currently, first-time buyers are driving the housing market, borrowers took out £300 million more in mortgages than last year, according to banks and building societies. Cheaper loans and government schemes with lower interest are encouraging buyers to save and get themselves onto the property ladder. From special tax-free savings accounts to shared ownership and innovative mortgages, there are options available to help buy your first home. Take a look at these top 5 options that have already helped millions…

Help to buy Lifetime ISA

If you’re saving towards your dream home, a lifetime ISA is a good choice, as you can get a boost of up to £1,000 free cash a year. You can save more into a LISA each year, £4000 more than you can into a Help to Buy ISA. You can also use the Lifetime ISA to purchase a high-value home at up to £450,000. To qualify buyers must be aged under 40, but over 18 to qualify.

What can you get out of a Lifetime ISA?

– You can transfer between providers.
– You get a free cash top-up.
– You can choose between cash savings and stocks and shares.
– You can deposit £4,000 a year, rather than face a monthly limit.
– It’s a tax-free wrapper
– You can purchase a property worth up to £450,000 anywhere in the UK
– If you and your partner both first-time buyers purchasing a property together, you can both open one and save – effectively doubting the bonus.

1. Help to buy ISA

These accounts help you save for a deposit and you benefit from the Government topping up your savings by 25%. You can put away an initial sum of £1,200. And can then save £200 per month after that, the government will give you a maximum bonus of £3000 once £12,000 has been saved.
Help-to-Buy ISA’s are also available for each first-time buyer, and not each household, this means if you and your partner were saving for your first home, you could each open a Help to Buy account and take advantage of the government schemes bonus. But Help to Buy ISA can only be used towards the total cost of the property, and not any additional fees such as solicitors and estate agent fees, or stamp duty etc.
What can you get out of a Help-to-Buy ISA?
– You get free cash to top up your savings
– Available from a number of banks and building societies
– These savings plans are tax-free
– You can transfer your ISA from one provider to another to chase the best rates
– This scheme isn’t limited to new-build homes

2. Shared ownership scheme

This scheme allows you to purchase a share of a new or existing home from a council or housing association, normally between 25% and 75% of the properties value. After living at the property for a certain period of time, you have the option to buy a bigger share of the property.

How can shared ownership scheme help you?
– You are only buying a share of a property, therefore a smaller deposit is required.
– Should make buying a home much more affordable.

3. Post Office Family Link Mortgage

If you are an aspiring first-time homeowner who can afford to repay a mortgage but you’re struggling to save enough for a deposit then the post office family mortgage could be the correct route for you. It allows you to secure a mortgage without a deposit by taking advantage of the help of your family. For the first five years, you will make two separate repayments, one towards the assistors mortgage (which is interest-free), and one towards your own mortgage, where interest rates will apply. With these arrangements you can use the equity in your parents’ home to help you get a deposit together, this means you don’t have to use your savings, and you won’t be draining your families hard earned savings.

What should you think about before applying?

When applying for a mortgage a lender will check your credit history and assess how much of a risk you are. These checks have become increasingly harder on buyers, due to the financial crisis back in April 2014. Furthering this the Bank of England also bought in restrictions, limiting the amount you can borrow. This will depend on your income, where banks will give you no more than 4.5 of your annual earnings. Buying a property is one of the biggest financial commitments a person can make and can be a daunting process for first-time buyers, so it is wise to seek professional advice, who specialises with in-depth knowledge of the market and who can look at a range of mortgage products to help you find your best deal.

New homes developers say higher interest rates and Brexit isn’t a threat for first-time buyers

This year has left much uncertainty in the housing market, with not only the interest rates being pushed up by the Bank of England but also the countries uncertainty around the Brexit ‘no deal’. In turn, this has led to mortgages rates sky high and UK wage development low, this is thought to of made it increasingly difficult for aspiring homeowners.

The increase in borrowing will have an immediate impact on households and is expected to dampen economic activity over the coming months. However, with scarcity at risk, there has been a high growth of first-time buyers, cashing in on the governments Help-to-Buy governments scheme. Estate agents across the UK, have not only seen a significant increase in new build homes being sold, compared to last year. But also housing asking prices across the market have also fallen by 2.3 pc this month according to Rightmove.

Mortgage approval rates for July showed another month of growth, which shows first-time buyers are still finding their way onto the property ladder. On the other hand, re-mortgage approvals fell by 7.3% July, showing that it’s becoming difficult to upgrade your home, rather than buy your first home.

Richard Carr chief executive of Fortitudo says this is a positive direction for the housing market for first-time buyers and Fortitudo will continue to help the housing market to grow, with our new build developments continuing to be associated with the Help-to-Buy Government schemes.

Top tips for getting on the property ladder in 2018

Planning to buy a first home can be as daunting as it is exciting for first-time buyers but there are a number of simple steps people can take to be 100% prepared and make the process run as smoothly as possible. With 2018 came the abolishment of stamp duty for first-time buyers, which has likely motivated aspiring homeowners to begin exploring how they can make their dream of owning their own home a reality. Check out these top tips to go from dream home to a real home this year.

1. Save save SAVE…
Saving for a deposit is undoubtedly one of the scariest and biggest hurdles anyone will have to overcome.

2. Research affordability hotspots
The property market around the UK is constantly changing, when buying a property, it is important to understand everything there is to know about the area you are hoping to settle. Try researching 3 potential areas to see which has the most stable market.
3. Get the most suitable mortgage to your circumstances
Take some time to really investigate the variety of mortgages that are available for first-time buyers. Some mortgage providers such as Virgin Money, have been developing innovative mortgages to help address challenges that first-time buyers in the current market.

4. Understand the credit score
Before getting a mortgage, you will be credit checked so now is the time to check your credit report and ensure all information is up to date and is accurate LINK TO CLEARSCORE. A slightly bad credit score can lead to mortgage lenders turning you away. It is the deciding factor in not only getting approved but also the rate of the mortgage you are offered. Now is the time to start paying any outstanding debt, be sure not to miss any payment agreements and all phone bills, utilities, and generic direct debits must be paid on time. Try to make more then the minimum repayment in 6 months prior to your mortgage application.

5. Do your calculations
Once your savings pot is up and running, consider using an affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. This will give you a clear guide as to what you can really afford. Once on the property ladder it can only get easier…

6. Know what your spending
One of the first steps to feeling more in control of your finances is to monitor your spending – plan in advance and review all spending. There are many saving cards, which do this for you, the saving card of the year is Monzo; an application platform that tracks your every move.