If you’re a (potential) first-time buyer, you might be feeling rather confused about your place in the housing market right now. Here is a quick rundown of the key housing-market news for first-time buyers and what it might mean.
The Stamp Duty holiday
Whether or not the Stamp Duty holiday is good news for first-time buyers probably depends on what sort of property you were looking to buy (and where). If you were looking at properties priced up to £300K then you may not be particularly thrilled at finding yourself (back) on a level playing field with people moving up the property ladder and only slightly ahead of investment buyers. On the other hand, if you’re looking at properties priced between £300K and £500K, you might be very happy about the change.
The return of the 90% mortgage
Officially, the 90% mortgage is back and available to first-time buyers. Unofficially, it very much remains to be seen how many first-time buyers will actually qualify for one. Nationwide, for example, has a rule in place that a buyer can only be gifted 25% of the deposit, the rest must have been raised through savings. It’s not clear what other rules are in place at Nationwide or what rules exist at other lenders.
It also has to be said that there is a difference between available deals and attractive deals. The simple fact of the matter is that mortgage lenders, like all other businesses, are going to offer the best deals to the best customers. When it comes to mortgage lending, the best customers are typically going to be the ones with the largest deposits (and the most stable incomes).
The Help to Buy Equity Loan scheme is extended
Currently, the Help to Buy Equity Loan scheme is open to all buyers. From April 2021, it will only be open to first-time buyers. Although the existing scheme runs to March 2021, it was supposed to be used to purchase homes which were finished on or before 31st December 2020.
It is this deadline which has now been extended to 28th February 2021 to give builders some breathing space after construction sites were forced to close for COVID19. The official final date for purchases to be completed is still March 31st 2021 but the government has indicated that there could be some scope for flexibility here on a case-by-case basis.
This news about the extension may be good for any first-time buyers who are using the current scheme, at worst it will be indifferent. The change to make the scheme open only to first-time buyers doesn’t really qualify as news any more but is likely still to be welcomed.
Some first-time buyers may regret the fact that the change to the Help to Buy Equity Loan Scheme only happens after the Stamp Duty holiday is scheduled to end. This may, however, be a positive. In short, come April 2021 first-time buyers will have two advantages over those moving up on the property ladder.
Remember the Lifetime ISA
The Lifetime ISA hit the headlines at the start of the pandemic when the government announced that people would be able to withdraw funds from it without a penalty even if they didn’t use them to buy a property or pay for their retirement. Other than that, it’s essentially been business as usual for Lifetime ISAs and their holders.
Obviously, the question of whether or not the Lifetime ISA is a good product for you will depend on your own situation. It is, however, worth noting as another possibility for helping first-time buyers get on the housing ladder.
Your property may be repossessed if you do not keep up repayments on your mortgage.