A Helping Hand Offered to First Time buyers

by Mark Johnston

Following the expiry of the stamp duty holiday on the 24th march 2012 first time buyers are now concerned about having to fork out extra cash on stamp duty.

The first time buyer will now need to find an extra £1,250 to £2,500 depending on the size of their potential property, which is not an insignificant sum if finances are already being stretched.

For the last 2 years the stamp duty freeze has been beneficial to a large number of first time buyers, recent research showed that 4 in 10 first time buyers benefited.

The average house price paid by first time buyers pushed through the £150,000 mark last year and therefore according to the Halifax nearly 45% of first time buyers will now have to pay the duty.

Separate research from Bradford and Bingley suggested that this figure is more likely to be 68%.

It is not surprising then that some of the country’s leading lenders have launched new deals targeted specifically at first time buyers.

A new breed of mortgage has therefore been launched to help first time buyers meet the cost of their stamp duty tax.

Halifax has offered a new deal which discounts the cost of stamp duty by up to 50%, providing that potential borrowers take up its new stamp duty product.

This product is available to those who can raise between 10% and 15% of the value of the property and is designed for purchases priced between £125,000 and £250,000, the mortgage comes with no product fee.

Qualifying applicants will then have their stamp duty bill paid; meaning a buyer purchasing a £250,000 home will get £1,250 towards their tax costs.

Stephen Noakes, mortgage director for the Halifax, said “now that the stamp duty exemption has ended, we are keen to soften the blow of a tax bill at what is already an expensive time”.

The nationwide has a similar scheme, which it claims will help ‘ease the pain of the return of stamp duty’, offering £1,000 cash back to borrowers choosing it 2, 3 and 5 year fixed rates.

Any initiatives designed to help first time buyers are particularly welcome at a time when it is already hard enough for them to get onto the property ladder, but the devil; is in the detail and offers are only really useful if the deals are competitive once everything has been taken in to account.

For instance the Halifax offer stands out with its generous no strings attached deal, but the catch is the interest rate on the 2 year fixed mortgage which is a hefty 5.99% and can be beaten,

Then of course there’s the Nationwide’s cash back deal which sounds great and is great well that is providing you already hold a flexaccount with the provider or are willing to switch banking providers to them. Plus there is also an arrangement fee of £499 that will eat in to the £1,000 cash back benefit.

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