Buying your first home can be a lot to wrap your head around. Even the basics like mortgages and credit checks can leave many scratching their heads. We here at Jackson Barrett and Gass want to make the buying process as simple as possible for first time buyers. That’s why we’ve compiled a list of three key things first time buyers should know.
The Difference Between New Build and Old Build
Put simply, a new build property is a brand-new property that is under 10 years of age. New builds tend to be more expensive than old builds, but old builds can present more age-related problems. If you discover a problem with an old build after you’ve purchased it, the combined cost of the property and any maintenance required could end up costing more than the price of a new build. All new homes in the UK are covered by a 10-year home warranty and insurance guarantee which makes new builds a more enticing prospect, but new builds tend to be smaller and lack the character of old builds. So which is better? It really comes down to what works for you!
The Difference Between Freehold and Leasehold
When you by a freehold property you own that property outright whereas you only own a leasehold property for a set amount of time ranging anywhere from 40 to 999 years. Freehold properties are generally more expensive since you technically own the whole property and the land it resides upon, meaning you’re free to do as you please with the property.
Leasehold properties tend to come with contracts restricting what you can and can’t do with the property. As a leaseholder you may also have to pay maintenance fees, an annual service charge, and a share of insurance on the building as per the terms of your lease. It’s worth double checking whether or not a property you are interested in is freehold or leasehold before starting any proceedings as sometimes this may not be clearly stated by the owner/estate agents.
Help to Buy Scheme, Help to Buy ISA & First Time Buyer ISA
The Government’s Help to Buy Scheme, First Time Buyer ISAs, and Lifetime ISAs are designed to get people onto the property ladder. The Help to Buy Scheme provides first time buyers with an equity loan of up to 20% of the cost of a newly built home. This means you will only have to pay a 5% deposit and the remaining mortgage. This 20% equity loan is interest free for the first five years.
A Help to Buy ISA boosts your savings with a 25% bonus. You can kickstart your ISA by depositing up to £1,200 into the account and you need to have at least £1,600 in the account to start getting the bonus. From then on you can make monthly contributions of up to £200 however if you miss a payment you will not be able to add it the following month. The Help to Buy bonus is capped at £3,000 and to earn this you’d need to have £12,000 in your account. Once you have hit this cap you can still use the ISA to save but you will only make a £3,000 bonus.
Lifeitme ISAs allow you to put up to £4,000 away each year right up until you turn 50. Unlike with the Help to Buy ISA, you aren’t required to make monthly donations with the Lifetime ISA and can deposit money in lump sums. Each year, the government will add a 25% bonus to your savings which can be up to £1,000. Due to the long-term nature of the Lifetime ISA, the maximum bonus you can get is £33,000 (provided you open it at 18 and max it out until you hit 50).
Are you planning on buying your first property? We’d be delighted to provide information and advice on the home-buying process. Contact us today to use our Residential Conveyancing services and we’ll guide you through every step of your property buying transaction.