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Q&A » Mortgages
Yes I know the obvious answer - someone who hasn't had a mortgage before but is that a legal thing? How do the banks know? What's to stop someone who has previously had a house and mortgage for applying as a first time buyer?
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134The phrase is sometimes used as shorthand for "someone at the bottom of the chain", rather than literally meaning someone who hasn't bought a house before.
In a conveyancing chain, someone has to be at the "bottom". They may be a "first time buyer" (never bought before) or a buyer who has sold + sitting on cash) or a buy-to let-er. Whether they need a mortgage or not is not really the issue - it's that they are not dependent on having a house to sell (otherwise they couldn't be at the bottom of the chain).
A shortgage of "first time buyers" (used in this context) is a problem for the market because it means conveyancing chains are longer, less likely to complete, more chance of chains collapsing etc.
Chains also need a "top" but t?here isn't usually the same problem with people at the top of the chain ?(death is a big help here).
Posted on 23 March 2010 |
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272There isn't really anything to stop them, apart from the threat of being convicted for fraud. When you apply for an FTB mortgage, the bank will check your credit report, which will show if you have an existing mortgage or have had one within the last year. But if you sold your house a while ago, then there generally isn't any way they can check - AFAIK you can't check individuals through the Land Registry, only properties.
The only problem is if you get into financial difficulties, or the bank later finds out, then you can be convicted of mortgage frand and potentially sent to prison. So think carefully about just how much you want that shiny FTB deal! Also, some banks may treat you as an FTB even if you had a property that you sold long ago. So if you disclose your full situation to the bank you may be able to get an FTB deal anyway, and it's much safer than the fraud option...
Posted on 23 March 2010 | Love 0 loves
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824FTB means different things to different people.
To an Estate Agent, it means someone who doesn't have a house to sell, whether it is to be their first home or whether their previous home has already been sold.
To a solicitor or conveyancer it only means that they can only charge fees for one puchase and not for a sale & purchase! ;-)
To a mortgage provider, it means that they may be having to offer improved terms when the amount of equity in it doesn't justify the improved terms.
To the buyer it means that they are looking forward to their first nest.
Mike
Posted on 23 March 2010 | Love 0 loves
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134Smudgebutt,
Having just listened to the budget, your question now makes perfect sense!
The stamp duty threshold has been raised for "first time buyers" only to £250k.
The HMR+C say "first time buyers" mean someone who has never owned a house solely, or jointly with anyone before (which makes sense).
Quite how they are going to police it, I'm not sure. There is still quite a bit of unregistered land about, and Land Registry records only go back to the 1980s or so.
Land registry records can be searched by individual name, but the general public can't do it (without a court order) but I assume the Revenue can do it.
Posted on 24 March 2010 |
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272Liesar, the policy has been criticised by the CML and Chartered Institute of Taxation as being very difficult to police. This is maily because, whilst you can search Land Registry records, they are not set up to identify an individual. So if some bloke called John Smith wants to buy a house and claims they're an FTB, Land Registry won't be of much help in showing whether or not they have owned property before - loads of properties will have traded hands with a John Smith and you won't be able to tell whether this bloke has owned one of them before. As I said above, it's more a question of obeying the law, and whether you are willing to run the risk of being caught. For the stamp duty exemption, the penalties for fraudulently claiming it will probably be doubled: you'll be hit once for the fraud and once for the tax evasion. Not worth it for less than £2,500 IMHO, but I'm sure someone will try...
Posted on 24 March 2010 | Love 0 loves
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134Swarbs - quite! I also see it says you can't have owned a property "anywhere in the world" !
Plus it's pretty mean that they count owning a caravan on a park home site as "owning property".
Posted on 25 March 2010 |
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