Advice for First-Time Buyers: Buy Before April 2025 to Save on Stamp Duty

Buying your first home is an exciting milestone, but timing is everything. With Stamp Duty Land Tax (SDLT) changes coming into effect on 1st April 2025, first-time buyers face a significant increase in costs if they wait too long to take the plunge.

 

Under the current rules, first-time buyers pay no Stamp Duty on properties worth up to £425,000. However, from 1st April 2025, this threshold will drop to £300,000, meaning buyers purchasing properties valued above this amount will face additional costs. For example, a home priced at £425,000, which currently incurs no SDLT, will cost £6,250 in Stamp Duty after the changes take effect.

 

If you're planning to buy your first home, acting now could save you thousands of pounds. This guide will help you understand the process, the costs involved, and why it's crucial to act before the SDLT changes come into play.

 

What Does a “First-Time Buyer” Mean?

A first-time buyer is someone purchasing their very first home and has never owned a residential property, either in the UK or abroad. If you have previously inherited or been gifted a property, you may not qualify as a first-time buyer, which could mean missing out on certain homebuying schemes and benefits.

 

What Is a Mortgage?

A mortgage is a loan specifically designed to help you purchase a property or land and typically consists of an initial deposit and a sum of money provided by a lender.

For instance, if you have saved £8,000 towards a property priced at £180,000, a mortgage would cover the remaining £171,000, with the loan provided by a lender such as a bank or building society.

 

You pay back the mortgage in monthly payments, and there are two main types of mortgages:

 

●  Repayment Mortgage: You make monthly payments to clear the mortgage and the interest over time.

 

●  Interest-Only Mortgage: You pay only the interest each month and repay the loan in full as a lump sum at the end of the term.

The mortgage term, or the length of your mortgage, can range from 2 years to as long as 40 years. A longer term typically means lower monthly payments, but you'll likely pay more in interest over the life of the loan.

 

What About the Deposit?

As a first-time buyer, your deposit is the upfront cash contribution you make towards purchasing a property, typically coming from your savings. This deposit usually needs to be at least 5% to 10% of the property's purchase price.

 

A larger deposit not only reduces the amount you need to borrow but may also give you access to a wider range of mortgage options or lower interest rates, potentially saving you money over time.

Don’t Forget Additional Costs

When buying your first home, it’s crucial to consider whether you can comfortably manage the financial commitment. Start by creating a budget to assess how much you can afford to spend each month while covering everyday expenses such as utilities, groceries, and other living costs.

 

In addition to your monthly mortgage payments, you’ll need to budget for other costs associated with buying a property, including:

 

●  Survey fees

●  Solicitor's charges

●  Mortgage arrangement fees

●  Insurance

●  Stamp Duty

 

With the SDLT changes approaching, factoring these costs into your budget early is essential to ensure you’re financially prepared.

 

Why Act Before April 2025?

 

The temporary Stamp Duty relief for first-time buyers was introduced in September 2022, offering significant savings for those purchasing properties up to £425,000. However, this benefit is set to end on 1st April 2025, when the threshold will revert to £300,000.

 

If you’re buying a home priced above £300,000 after this date, you will need to pay Stamp Duty on the portion above the threshold. For example:

 

●  Current Rules (Before April 2025): No SDLT on a £425,000 home.

●  New Rules (From April 2025): SDLT of £6,250 on a £425,000 home.

This change will directly impact first-time buyers, so acting before April 2025 can help you avoid thousands of pounds in additional costs.

 

How Can Marsons Solicitors Help Me?

When you are at the stage of engaging with a solicitor, our experienced conveyancing team at Marsons Solicitors understand the unique challenges first-time buyers face, especially as these SDLT changes approach.

 

We’re here to guide you through every step of the process, from reviewing contracts to handling the legal details, ensuring your property purchase is smooth, stress-free, and completed in a timely manner.

 

By acting now, you can take full advantage of the current Stamp Duty savings. Don’t wait until it’s too late. Contact Marsons Solicitors today to discuss your needs and let us help make your home-buying journey a success.

 

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