First-time buyers

Buying your first home is exciting, but it can be daunting too.  Here are some tips to help make the process a little less stressful. 

Planning is everything.

The very first thing you need to do is work out if owning is for you. Can you afford to pay not only the monthly mortgage payments, but the running costs of a home too? Do the sums!

Work out how much you will need to save for a deposit.

The size of deposit required varies from lender to lender. Last year the average first-time buyer put down a 23% deposit on their home, but some schemes (more details below) allow you to only put down a 5% deposit. A mortgage broker or bank will be able to help you work out how much you’ll be able to borrow based on your income, and there are lots of affordability tools online too.

The bigger the deposit, the longer you’ll have to save, but a larger deposit will give you a longer-term advantage. It’ll give you access to better mortgage deals and of course lower payments each month too. But it’s also important to consider how many years you want to spread your mortgage across.

And start saving as soon as you’re able to.

Our research shows that it takes 4 years and 9 months on average for a couple to save for a 15% deposit; longer if you’re by yourself (around 10 years) and more if you’re buying in London (15 year and 9 months).

Take time looking for a mortgage.

This is the most expensive purchase most people make, and it’s important to get it right. Banks, building societies and mortgage brokers can talk you through the best type of mortgage for your needs. And read up too. The personal finance sections of the newspapers will give you a good feel for what is available, the best deals out there and where the potential pitfalls may lie. Do your homework!

Consider some of the homeownership schemes available.

Help to Buy is probably one of the most talked about. With just a 5% deposit, it’s possible for a first-time buyer to purchase a new home with all the guarantees and appliances that come with this.

Help to Buy

Shared ownership might also be worth thinking about.

Under such a scheme you own a share of a property – between 25% and 75% of the value of the home. The remaining amount is owned generally by a housing association and you pay rent on this.

Shared ownership

And don’t forget to factor in stamp duty – it can be hefty!

But also remember there are special stamp duty dispensations for first-time buyers which means it doesn’t apply on a home that costs less than £300,000. For homes costing between £300,000 and £500,000 a rate of 5% is applied but only on the slice above the £300,000 threshold.

There are other costs you need to think about too.

The mortgage lender will need to be paid a fee for arranging your mortgage, although sometimes you have the option to add this onto your mortgage. And to check the value of your home, they may expect you to pay a valuation fee too. This ensures that the amount you’re borrowing reflects the true value of the property.

Once this has all been agreed, you may want to consider taking out your own survey to check that property is structurally sound. And then you need to instruct solicitors to carry out the actual purchase. Lenders and surveyors generally require lots of paperwork – including bank statements, payslips, proof of addresses etc. – so it’s always handy to start pulling this information together as soon as you can to help speed up the process.

Finally, most important of all, looking for your new home!

Stay close to your local estate agent who can help when the right property comes up, keep an eye on the property portals and on your local papers too. Your dream home is out there!

Which takes us right back to the beginning - it’s never too early to start planning!

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