The latest advice and top tips on
buying, selling and renting a home

1st Time Buyers - What You Need to Know

House Network

Buying your first home is a daunting process, and one that it’s incredibly hard to prepare for. From finding the right home to the application process and getting approved for a mortgage, there’s a plethora of things that could go wrong. Here at House Network, however, we’re here to help, and we’ve put together a helpful list of everything you need to know.

What size deposit do I need? 

Sadly, saving the deposit for a home can take many years, and before you even begin to look for the property of your dreams, you’ll need to start saving. For a mortgage to be approved, you’ll generally have to have at least 10% of the property’s value saved. Some mortgages are available with a 5% deposit, but most people try to save between 10% and 20%, if possible. The more you save, the less money you’ll owe and the lower your repayments will be.

Of course, this generally means saving around £10,000, which is an astronomical sum if you don’t currently have any savings. As such, saving can become hard. Set small targets and goals to make it more achievable. This way, you’ll feel like you’re getting somewhere.

Can you actually afford this?

Gradually saving for a deposit is one thing but, sadly, it’s only the start of the adventure and the financial commitment. When you have a mortgage accepted, you’ll still have monthly repayments to make and, if you’ve only put down a small deposit, these can be high. As such, you’ll have to budget everything carefully.

Lenders will test your ability to repay stringently, factoring in chances of you being made redundant or having children to see if your finances can still cope with the repayments. The days of ‘easy credit’ are long gone. When applying for your mortgage, you’ll have to prove your income to the lender and they’ll also want to see evidence of any outgoings, so you’ll need to plan down to the last penny. By looking at your own finances first, you’ll get a much better understanding of how much you can afford to borrow.

Factor in other costs

In your monthly budget it’s also worth remembering that there are other associated costs in owning a home. As such, you’ll also have to factor in other associated costs, such as:

  • valuation fees
  • Stamp Duty
  • Fees paid to solicitors
  • The cost of surveys
  • Moving home costs such as removal firms or van hire companies
  • Buildings and contents insurance
  • Furnishing costs

This list is by no means exhaustive – and isn’t meant to scare you – but gives you a good idea of the costs you can expect when moving. Sadly, they all add up, so it’s much better to prepare for them in advance.

Check for Government schemes

The Government know that getting on the property ladder is incredibly hard for first-time buyers and, because of this, they’re doing all that they can to help out. As a direct result, there are a number of schemes they currently have available to help, including Help to Buy and Right to Buy, as well as ISA incentives.

It’s worth looking for these schemes, and assessing your eligibility, because it could make getting on the property ladder much, much easier.

Finding the perfect mortgage offer

Many high street banks now offer mortgages, and there’s a good chance that whoever you’re currently banking with also offers mortgages. However, it’s important to know that rates and options change all of the time, and the place you currently bank with may not offer the best deal. As such, you should always shop around for the best rate. Talk to the experts such as mortgage brokers, and do as much research as possible before you buy. Ultimately, you could save thousands of pounds.

If you’re struggling to save the money for a mortgage then you can also get something known as a guarantor mortgage where someone can help you pay your mortgage if your financial circumstances change or you’re unable to meet payments. This is usually a relative or close friend.

Know the difference between freehold and leasehold

If you’re buying your home then it’s important that you know the difference between freehold and leasehold.

The freehold includes the land that the property sits on. If you’re buying a house then this is the most common form of sale. However, if you’re buying a flat, then it’s more likely to be a leasehold where you buy the rights to own a property or land for a certain period of time. Alternatively, you may buy a share of the freehold with other flat owners.

Navigating the application process

The application process can be incredibly stressful, leading to many sleepless nights and moments of high stress and worry. The good news is that, if you’re straightforward in the information you provide to your bank then you have very little reason to worry, so relax a little.

You’ll generally only encounter problems if you’re dishonest with your mortgage provider or fail to disclose important information. Of course, you could be denied a mortgage if you haven’t got a large enough deposit reserved, or if the bank don’t think you’ll be able to meet your repayments. But, if you provide all the information they need promptly, including copies of bank statements, payslips and tax returns, the process will be much smoother.

So, stay calm, relax and enjoy the process. After all, it’s only one small step on your journey towards inhabiting the home of your dreams. Good luck.