Stamp Duty: The Perks of being a First Time Buyer

Before you commit to buying your first home, stop, think and calculate!

Reading Time: 2mins 

The flat you can buy today on your current budget, equates to a house in a few years of patient saving.

As soon as you use your First Time Buyer rights, that’s it, they’re gone. Any property you buy thereafter will fall victim to *higher Stamp Duty rates.

After the Autumn 2017 Budget, it was announced that First Time buyers will not have to pay stamp duty for the first £300,000 of their purchase and £5,000 less on a purchase between £300,000 and £500,000.

The image below shows a representative example of how Stamp duty is calculated for a £500,000 property:

Screen Shot 2018-10-06 at 15.32.13

Any property over £500,000 is not eligible for Stamp Duty relief. So a £600,000 property would be subject to a hefty £20,000 stamp duty bill.

If you decide to buy a second home or a Buy-to-Let property, you will also have to pay an extra 3% stamp duty on top of the current rates for each band.

Below is a table for *standard Stamp Duty bands:

Minimum property purchase price

Maximum property purchase price

Stamp Duty rate (only applies only to the part of the property price falling within each band)

£0

£125,000

0%

£125,001

£250,000

2%

£250,001

£925,000

5%

£925,001

£1.5 million

10%

Over £1.5 million

12%

Patience is indeed key here.

Moving slightly away from stamp duty, as a first-time buyer there are also preferential Mortgage rates and products for you. Combining these deals with your discounted stamp duty, you are making a whopping saving as a first time buyer and shouldn’t let anxiety or this competitive nature that many millennial’s have distract you from your goal and ultimate saving opportunity.

Think about longevity, don’t live in the now.

Why buy an “okay” flat now for £150,000 (that you only intend to live in for 3 years) and waste your stamp duty discount, when you can buy a £300,000 property that you are much happier with in 2 years time a live a foreseeable future in?

Stop, think and calculate.

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