First Time Buyer
In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world. This includes previous acquisitions by inheritance or gift, or by a financial institution on behalf of a person under an alternative finance scheme.
In order to determine a person’s Stamp Duty Land Tax liability, HMRC defines a First Time Buyer in the following way:
A First Time Buyer usually puts down a deposit, which can start as low as 5% of the property’s value, and then takes a mortgage loan to make up the rest of the property value. It can sometimes seem harder for a First Time Buyer to get a mortgage, due to all the affordability and credit score checks needed to get approved, however knowing exactly what the process looks like can make everything seem much clearer.
Lenders will take in to account your income as well as outgoings, to determine how much is a comfortable mortgage amount for you to borrow. The way affordability is calculated can differ from lender to lender, for example; some are less generous to self-employed applicants, and some will take a higher percentage of a variable commission payment than others. It can be tricky to know which lender will treat your income in the most favourable way, but a good mortgage broker will know exactly where to go for the most suitable mortgage to meet your needs.
Some lenders may offer special rates and propositions to First Time Buyers, which can mean potentially borrowing more than you thought you may be able to. There are also government-backed schemes which can support someone looking to get on the property ladder.