Buying a property is an exciting time however it can be stressful too, especially when you are a first-time buyer. The number of factors involved in purchasing your first home can feel overwhelming. This blog post takes you through the process of buying your first home, including saving your deposit and applying for a mortgage.
Saving a Deposit
Generally, you will require a 10% deposit plus a mortgage. The amount you will need to save as a deposit for your first home will depend on several factors, such as:
- Typical property prices in your area.
- You and/or your partner’s income. This will determine the amount you can borrow from the bank for your mortgage.
- Debt and committed outgoings. It is advised that you pay off outstanding debts and reduce committed outgoings. This will not only assist you moving forward with your savings but will also increase the amount available to you on the mortgage.
First-time buyers can benefit from the government Help to Buy schemes which offers a bonus of up to £3000 which will be claimed by your conveyancing solicitor during the property transaction. The Help to Buy schemes have been running since 2013 and have supported close to 117,000 first-time buyer purchasers. For more information on the Help to Buy schemes and how to apply, read our Help to Buy ISA blog post.
Saving for a deposit for your first home can be a lengthy and somewhat daunting process which has resulted in an increase of gifted deposits. A gifted deposit is any amount that somebody (usually the bank of mum or dad) gives a home buyer towards their deposit or gifts them the entire deposit. More and more people are relying on gifted deposits to get a mortgage. Find out more about the gifted deposit and how a gifted deposit is dealt with during your property transaction by reading our gifted deposits blog post.
You will also need to budget for costs associated with purchasing your property such as legal fees, survey costs, removal costs and the cost for any works required in your new home. First-time buyers will pay no Stamp Duty on the first £300,000 for properties worth up to £500,000 which will save you a considerable amount of money.
Finding a Mortgage
The mortgage market is incredibly competitive, and it can be hard to understand what exactly is on offer. Most first-time buyers will benefit from taking independent advice from a mortgage adviser before buying their first home. The mortgage adviser will analyse your finances and assess the level of mortgage repayments you can afford to work out roughly how much you can borrow. This will identify what you can afford which is recommended before you go house-hunting. The broker can get an AIP (agreement in principle) issued from the proposed lender, which will give the agent and seller of a property you would like to offer on piece of mind.
Whichever mortgage you apply for, your lender will want to know you can continue to make your repayments. The lender will request proof of income and information about your outgoings such as debt, bills and other costs such as travel or childcare.
You’ll no doubt have plenty of requirements from your prospective new home. A good start would be to look at properties that have sold in the areas you’re most interested in. This will inform you of what property types, sizes and styles you can afford in the different areas you may be looking in.
If you want to buy a house, it’s likely you’ll buy the freehold, meaning you own the property and land it sits on. If you’re buying a flat, you’ll be buying leasehold, or buying into a share of the freehold. Leasehold ownership of a flat is simply a long tenancy, the right to occupation and use of the flat for a long period. It is possible to extend the lease to the property which is advised as the shorter the lease becomes it depreciates in value. Lenders also have lease length requirements when considering lending money on a property. You can find out more about lease extensions here.
Naturally, new build homes are an attractive option for first-time buyers because of the government Help to Buy schemes available and the convenience of moving into a brand-new property which requires no renovation – something which can be very costly. For further information about new build homes, read our new build home blog post.
The legal process of buying and selling is known as conveyancing. Due to the complexities of conveyancing, it’s important that you choose a solicitor who has considerable experience in this field. Our team of expert conveyancing solicitors have decades of collective experience in this specialist area and are committed to delivering a smooth and stress-free service.
Use our easy flow chart to track the progress of your property purchase.
Preparing to Move
Moving home is statistically one of the most stressful things you can do in life. Making sure you’ve packed everything and like most people having to move it in one day and unpack is hard enough without having to think about all the other things you should be doing. That’s, why we’ve created a handy moving home checklist to make sure moving is that little less stressful.
If you would like to discuss purchasing as a first-time buyer in further detail, please contact the team via our main switchboard number 0121 778 2371 or alternatively email firstname.lastname@example.org.