If you’re struggling to get back in the work groove after a restful festive break, then you’re not alone. In fact, an American study revealed that 50 per cent stated how they feel drained for a week after returning to work after a holiday.
However, if you’re a first-time buyer then there’s good reason to shake off those back to work blues, dig deep and get motivated when it comes to applying for a first-time buyer mortgage, as the window of opportunity to pay less tax is closing.
So, now that we’re in week two of January – and by now you’re hopefully ready to tackle the year ahead – then here’s why there’s less than three months to go before buying a first-time home gets more expensive.
Making the most of Stamp Duty Land Tax
As a Maidenhead mortgage broker, the topic of Stamp Duty Land Tax (SDLT) is never very far away.
And whilst making the most of SDLT is a relative term (after all, nobody really likes tax), there are some very real things that you could be doing right now to save thousands of pounds before 1 April.
Our team of Berkshire mortgage brokers weren’t particularly surprised when the government announced that it was lowering the SDLT threshold for first-time buyers from £425,000 to £300,000 – but we were a little disappointed. After all, buying a home is hard enough as it is. Making it even more expensive for first-time buyers puts homeownership that little bit further out of reach.
So, let’s take a look at the figures.
Before and after 1 April
As it stands, first-time buyers only begin to pay SDLT on properties valued at £425,000. Then there’s a five per cent tax liability on the amount between £425,001 and £625,000.
Let’s say that a first-time buyer has secured a property for £500,000. Until 1 April, the tax liability is currently five per cent on £75,000, which amounts to £3,750.
As of the 1 April, first-time buyers will begin to pay SDLT on properties valued at £300,000. Not only that, but the maximum purchase price for which first-time buyers can benefit from First-Time Buyers Relief is dropping from £625,000 to £500,000.
So, using the same purchase price example of £500,000, there’s now a five per cent tax liability due on £200,000, which amounts to £10,000.
To summarise, first-time buyers purchasing a £500,000 property will pay £3,750 in tax before 1st April 2025, and then £10,000 in tax thereafter.
Take steps to be tax efficient
With less than three months to go, time is running out for first-time buyers to take advantage of what is currently a preferential SDLT rate.
Our advice is that if you know you’re ready to buy, then get in touch with our team of mortgage brokers in Maidenhead, who will be able to get the ball rolling for you.
A £6,250 saving on a £500,000 property purchase is significant, so try and get it whilst there’s still time.
Would you like to save up to £6,250 in tax? If so, contact our Maidenhead mortgage brokerage as soon as possible on 01628 560820 or email enquiries@altonmortgages.co.uk to arrange an initial mortgage consultation.