We often speak to people who are unsure if they are classed as first time buyers. When I first started out as a Mortgage broker, I used to think it was a bit of a strange question, surely you would know if you were a first time buyer or not? The answer would seem obvious, but is actually not quite as simple as you would imagine.
The first thing we need to look at is in what context you want to know. Is it from a Mortgage lenders perspective or HMRCs and stamp duty?
Stamp Duty
Lets start with the easy one, in the context of Stamp Duty, the answer would usually be if you have ever owned a property, you would not be classed as a first time buyer. If you have not owned a property for 10-20 years, you would still not be classed as a first time buyer.
There are some exceptions to this, but rather than risk providing incorrect or out of date information, it is probably worth checking the HMRC website here – although as a general rule of thumb, if you have ever owned a property and you are now buying a home again, stamp duty would be due.
Mortgage Lenders or Products
This is where gets a little complicated however. Occasionally, lenders offer incentives for First Time Buyers that may not be available for home movers or if you have owned a property in the past.
Some of the incentives you may see are:
- Cashback of maybe £250-500,
- A free valuation,
- A slightly lower interest rate,
- A smaller application fee.
(It is important to note that it would normally only be one of these, not all of them).
Some lenders will class you as a first time buyer if you have not owned a property in the previous x number of years. The number of years can vary from lender to lender, but it is probably safe to say if you have owned a property in the last 5 years, there will not be any/many lenders who will class you as a first time buyers. Some lenders will kick in at 6 years (when it has dropped off your credit report) and others may be 10 years.
There will also be a lot of lenders who will take the same stance as HMRC above and define a first time buyer as someone who has never owned a property.
Summary
For the purposes of Stamp Duty, you would usually be classed as a first time buyer if you have never owned a property before – ever. But there are exceptions, so it is worth speaking to your solicitor beforehand for them to check.
From a Mortgage lenders perspective, it can vary and this is something we would usually look into for our customers if there is a possibility you could be eligible.
We are always happy to have a chat though and discuss your circumstances, so please do get in touch if you would like to talk anything through with us.