Everyone knows that the past decade has been no picnic for first-time buyers. Soaring house prices, an influx of buy-to-let landlords snapping up starter homes, and now a drought of suitable mortgages have all been responsible for placing the first rung of the housing ladder out of their reach.
First-time benefits
But things aren't all bad. Buyers who complete on the purchase of a home before 31 December this year could at least benefit from the temporary raising of the lowest stamp duty threshold from ₤125,000 to ₤175,000. Payable at a starting rate of 1% of the property value, this could represent a saving of up to ₤1,750 - handy when you're facing one of life's biggest financial challenges.
According to research published by Halifax this week, more than one quarter (27%) of first-time buyers in England and Wales are estimated to have escaped paying the property tax since September 2008. This is when the government announced the perk in a bid to stimulate a moribund housing market.
Only 17% of first-time buyer purchases during this period were above the £175,000 temporary threshold according to Halifax. It also reported that, had the threshold not been raised, a significant 43% of first-timers would have needed to cough up during the same period.
Martin Ellis, chief economist at Halifax, said: "The stamp duty holiday has been a boost to many people in a very difficult economic climate. Lower prices have also brought some properties below £175,000, so these buyers will be exempt from stamp duty - whereas a year ago they would not have been."
The clock is ticking...
But first-timers still undecided as to whether to take the plunge should waste no time in making up their minds. Research earlier this month from Abbey revealed that up 35,000 home buyers are in danger of missing the stamp duty holiday deadline. This is because a house purchase typically takes at least three months, so the effective deadline for mortgage applications is 30 September - which is next Wednesday.
While the stamp duty holiday alone is no reason to rush a choice of property, or even mortgage deal, those already on the starting blocks can take measures to speed up the buying process - and save as much money as possible. Here's how:
1. Be clear on your maximum price
The stamp duty holiday is not exclusively for first-time buyers, but it will strictly apply to homes priced under ₤175,000. In this case, be clear to the seller from the start that this is the maximum price you can stretch to. You can even tell them why: if they want a quick sale they may be happy to accept a slightly lower price than they were hoping to achieve.
2. Iron out potential problems with your credit rating
One of the common sticking points of buying your first home is getting a mortgage agreed - especially 'post credit crunch' when banks and building societies favour the least risky borrowers with handsome deposits.
However, as a first-time buyer, you can make the process as easy as possible by checking your credit rating in advance for potential hiccups. You can do this online at one of the credit reference agencies such as Experian, Equifax or CallCredit.
If you find an anomaly, such as a late or missed payment that wasn't your fault, you can add a 'notice of correction'. A lender may factor this into its decision when considering your mortgage application.
There are also steps you can take to improve your credit rating as Peter Harrison explains in his article 'How to improve your credit score'.
3. Shop online for the best mortgage
According to a survey published this week from FindaProperty.com, 55% of first-time buyers receive some financial help from their family. But even if this equates to a 10% deposit - which is still a hefty ₤17,500 on a home at the top end of the stamp duty holiday threshold - your choice of home loan will be fairly limited. That said, you can still save time, effort and money by comparing the best deals available online.
For example, top of the tables at a 90% loan to value is currently HSBC's two-year discount priced at 3.89%. But, in return for the low rate, the deal comes with a relatively high booking fee of ₤1,199.
First-time buyers looking for the security of a fixed rate will pay a higher rate of interest in return. The best deal available with a 10% deposit is currently from Yorkshire Bank priced at 5.99% with a ₤999 fee.
Those fortunate enough to have a 20% down payment could look at NatWest's two-year tracker payable at 2.99%, which comes with a reasonable ₤799 fee.
4. Keep on top of the conveyancing
The conveyancing process - in other words, the drawing up of all the legal documents, searches and surveys involved in buying a house - can be notoriously cumbersome. Explain to your solicitor from the start that you will need to complete the sale by the end of the year and, on this basis, agree a fee upfront too. Keep on top of the process as it goes along and, if time is tight, see if you can organise exchange and completion to fall on the same day.
It's also worth noting that fees vary significantly so it's well worth comparing prices before you decide which solicitor to go with. And you don't need to stick to someone in your local area as the paperwork can always be posted to you to sign. You can compare prices from more than 200 solicitors nationwide by using moneysupermarket.com's new conveyancing service.
Don't stop at stamp duty savings
Don't forget that, once you have arrived in your new home up to ₤1,750 better off, there are plenty of ways you can cut costs further - such as shopping around for the cheapest energy and broadband provider. After all, life rarely gets more expensive than buying your first home so any reduction in your monthly expenses is certain to prove a blessing for 2010.
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