Tag: Help to Buy

A buyers Market, not a sellers…

Ashanta CharmLeave a comment

It’s no secret that Covid-19 has had a devastating impact on the entire world.

Millions have lost their jobs. Off of the back of this, many will have to take payment holidays on their mortgages, some may eventually fall behind on mortgage payments and some may even lose their homes due to repossession. 

What does this mean for the market?

I’m going to focus on 2 things today.

  1. It will be a buyers market, not a sellers 
  2. Lenders will have to recover a lot of unpaid debt and be a lot more frugal with who they lend to

What does this mean for you? 

The person with a home to sell…

  • Now is the time! Sell as soon as possible and sit on the funds. Move in with family, think about short term renting and sit on the proceeds of the sale as in a few months, you will be able to buy a bigger house for a lot less.
  • Fast forward a few months… If you take too long to take the leap to put your property up for sale, you may need to take an Offer much less than what you wished for.

Are you in a chain? There’ll be more about what can do next week… 

 The person with a home to buy…

  • Hold your horses. There are going to be many houses to choose from and many people desperate to sell them so this may work in your favour when it comes to negotiating on price. 
  • You may need to front more deposit than you may have initially planned due to Mortgage products being quite unstable. 90% Mortgages which require a 10% deposit have been pulled and reintroduced week by week. Lenders may also be a lot more picky with who they lend to, request much more information and be much quicker to decline applicants who don’t fit within their risk appetite 

Key take aways

Home Sellers

  • The time is now!

Home Buyers

  • Be patient. Fix your credit & save save save!

All information on my blog is opinion driven based on market trends, statistics and forecasts regarding the current situation. 

*Photo Source https://www.standard.co.uk/news/estate-agents-face-ban-on-for-sale-signs-6781275.html

2019 Retrospective

Ashanta CharmLeave a comment
Thank you for your views and engagement from across the globe

August 24th 2018 – TellMeElleCee was born. An introductory post was published and so the journey began!

From August 26th 2018 – Throughout 2019 a variety of posts, Mortgage industry gold and financial hacks were shared. 

The following 18 topics have been dissected and explored:

Here’s to an informative 2020…

The 2018 Budget – Things you need to know

Ashanta Charm1 Comment

Stamp Duty – Travel – Income Taxes – Brexit

Reading Time: 4 mins

What does this mean for First-Time Buyers?

Nothing much has changed here.

However, for First-time buyers purchasing a property using the Help to Buy Shared Ownership scheme, an anomaly was fixed. Previously, buyers of a shared-ownership property would be taxed on the full market value of the home (up to £500,000) rather than only the share they were buying. If the full market value of the shared-ownership property was more than £500,000 the buyer would not have been eligible for any stamp duty reduction at all.

So, a buyer paying £125,000 for a 25 per cent share of a new home valued at £500,000 would still have had to pay £10,000 stamp duty – equivalent to five per cent of the sales price above £300,000.

Now, First Time buyers purchasing a property using the Help to Buy Shared Ownership scheme will only be eligible to pay stamp duty, if any at all, for the share they are buying. So, a buyer paying £125,000 for a 25 per cent share of a new home valued at £500,000 will not pay stamp duty.

Other stamp duty rates remain the same.

PURCHASE PRICE

STAMP DUTY RATE ON FIRST PROPERTY (1)

Up to £300,000

0%

£300,000.01 – £500,000

5%

What does this mean for people on £50K per annum salaries?

Previously, if you earned £46,350 per annum and above, you’d fall in to the higher rate tax payer threshold – you’d be taxed 40%

This has now been increased to £50,000 per annum – April 2019

What does this mean for the cost of travel?

No major changes have been made here.

Costs generally remain the same.

However there has been an introduction of a new rail card for 26-30 year olds providing 1/3 off most rail travel. This will be made available nationally by the end of the year.

Brexit? What happens now?

This is something that I will not dabble too deep in. After all, our Schools, Higher Education facilities and Government have barely wrapped their heads around this.

However, from the budget, it is clear that a lot of money is being pumped in to various regions to help supplement the immediate defects of suggesting and eventually leaving the European Union, however this is a grey area as we haven’t even established 1. Whether we’ll have a no deal Brexit 2. Whether we’ll have a Brexit deal 3. Whether there’ll be another referendum resulting in no Brexit at all.

The point I want to make here is the importance of understanding the political process and what your vote means. Keep your eyes peeled, ears open and remain attentive along the Brexit journey so that you know how the progress or lack of it, will affect you.

Read Newspapers, watch/listen to the news, question time and have a little fun with the internet -Ultimately, stay informed.

LISA: The Lifetime ISA

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What is the LISA?

Reading Time: 1 min

ISA

This is an Individual Savings Account you can use to buy your first home or save for later life, like retirement.

You have a limit of £4,000 that you can put in each financial year until you are 50.

When you are 50, you will not be able to pay into your LISA or earn any bonus, however your account will stay open and you will earn interest on your savings.

Your annual ISA limit is £20,000, so the cap of the £4,000 LISA limit counts towards your annual ISA limit. Bare in mind that you are only allowed to open one ISA per tax year, so you lose out on £16,000 worth of tax free savings.

Back to the LISA. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

Terms and Conditions:

  • You must be 18 or over and under 40 to open a Lifetime ISA
  • You will be charged 25% if you withdraw money from your ISA for any reason other than:
  1. To buy your first home
  2. At aged 60 or over
  3. If you’re terminally ill, with less than 12 months to live

The withdrawal fee is to recover any Government bonus, essentially withdrawing money for any other reason than the above will result in you receiving less money than you paid in.

  • For first time buyers, the price of the property has to be £450,000 or less and you must use a solicitor or conveyancer to act on your behalf as the LISA provider has to transfer the funds directly to them.

 

Over the last few weeks, we’ve explored the various schemes available for First-time buyers/Home movers with the Governments assistance. If you’ve missed out, or have just joined us, feel free to catch up on the posts here:

 

 

Photo credit: homesandproperty.co.uk via Google search.

Help to Buy: Equity Loan

Ashanta Charm2 Comments

Help to Buy

Reading time: 3 mins

In this month of October, we have been solely talking about the various Help to Buy schemes available.

The Help to Buy initiative was a way of assisting young first-time buyers acquire their first home. At a time where it almost seemed impossible for the millennial to own a property in the ever changing and increasing property market, the government stepped in to lend a hand.

However, there is a catch. Nothing in life is free and that’s why it is important to know the pros and cons of any scheme you commit to.

These scheme consist of the following:

Help to Buy ISA

Lifetime ISA Post due 29th October

Equity Loan

Shared Ownership

Mortgage Guarantee Scheme Withdrawn November 2016

 

What is a Help to Buy Equity Loan?

 

The Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.

This scheme is available to First-time buyers and Home movers.

For example:

Purchase price: £200,000

Your contribution to the deposit: £10,000

The Governments contribution to the deposit: £40,000

Mortgage Amount: £150,000 75% LTV

Screen Shot 2018-10-21 at 12.15.30

You won’t be charged loan fees or interest on the 20% loan for the first five years of owning your home, however you will have to pay £12 management fees each year.

After 5 years, you will have to start paying back the 20% you initially borrowed, plus interest and your monthly Mortgage payments

ALERT

Things to bare in mind:

  1. Interest kicks in after five years, and could amount to a chunky sum over time.
  2. The Government will take the same percentage of the sale price as you opted for when you took out your equity loan (regardless of how much the loan was originally for) when the property is sold.
  3. You can repay part or all of the loan early, but the Government will only accept this if it’s a minimum of 10% of the property’s current value.

Help to Buy: ISA

Ashanta Charm3 Comments

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Reading Time: 3 mins

A Help to Buy ISA is something all First Time Buyers can benefit from. Whether you decide to use a Government Scheme or go the Standard Mortgage route, you can maximise your savings.

The Help to Buy ISA was an initiative the former Chancellor George Osborne and the Government set up to help First Time Buyers get on the property ladder in December 2015, however the scheme will be closed to new savers on the 30th November 2019.

You will only receive the Government bonus when you are close to completing on the purchase of your property.

The great thing is that a H2B ISA isn’t a per household account, but a per person account. So essentially, you and your partner can get a bonus as little as £600 or as high as £6,000

How much bonus will you get from the Government?

Savings below £1,600 = £0 from the Government as the funds are insufficient

Savings between £1,600 and £12,000 = A 25% top up from the Government

Savings over £12,000 = A £3,000 top up from the Government

Screen Shot 2018-10-15 at 13.33.52

How it works:

  1. You open your Help to Buy ISA
  1. Make an initial deposit of £1,2000 and the maximum of £200 per month there after.
  2. Continue saving. Build up a strong balance
  1. Find a property in your price range, make an Offer and go through the Home buying process
  1. When you are close to completing on your purchase, your solicitor will apply for your Government bonus.

Things to consider

It’s important to note that there have been many occasions where the bonus is not paid to the applicants until after completion has taken place.

Yes, they got the money and wasn’t scammed out of the scheme, however, the bonus funds couldn’t be used towards the deposit.

If you don’t particularly need the bonus to make up your deposit, this is great as you’ll have funds available to kit out your new home and buy some very needed furniture, accessories and electronics after completion.

The downside is that if you had calculated the bonus in to the mandatory deposit amount which is quite time sensitive in acquiring around exchange etc, then you can find yourself in a bit of a pickle.

Your maximum ISA allowance per tax year is £20,000 – this includes a standard Cash ISA, Lifetime ISA and Help to Buy ISA*

*You cannot get a first-time buyers bonus on both the Help to Buy ISA and Lifetime ISA

Screen Shot 2018-10-15 at 13.39.34

What to do?

If you’re a First Time Buyer, I’d 100% say to open a Help to Buy ISA NOW even if you have no desire to get on to the property ladder any time soon

Don’t depend on the ISA to complete/make up your deposit

See the Help to Buy ISA as a post completion fund. A fund to kit out your new home and cover any post completion unexpected expenses.