How to Get on the Property Ladder: Tips for First Time Buyers

Being a first-time buyer can be overwhelming. You’ve got to consider the type of property you want and how much it will cost, but also how long it will take to save up for a deposit and whether you’ll be able to afford the monthly repayments once the mortgage has been taken over. But don’t worry – we’ve put together this guide to help you get on the property ladder in no time!

1. Save For a Deposit Early.

With the average house price at around £285,000, just a 10% deposit would be £28,500, so it’s not surprising that some first-time buyers find saving for their first home overwhelming. The average age of first-time buyers in the UK is 32, so planning as early as possible will help you get on the property ladder sooner. The first step is to start saving as much as you can as soon as possible. This is the single most important thing that anyone can do to get on the property ladder, and it’s not just about money – it’s about changing your mindset.

Saving money is more valuable than paying off debts or investing in other things because it gives you options. You could use your savings to put down a deposit on a house or pay off credit card bills so that they don’t drag down your ability to borrow money later on when buying property (or anything else). If things go wrong with one investment but not another then having some cash sitting around means that there won’t be any problems with getting through those tough times until things turn around again!

There are several first-time buyer schemes available including the Lifetime ISA, where you can save up to £4,000 per year and a get 25% Government bonus. For more information on the schemes available check out our blogs.

2. Research the Area You Want to Live in and Make Sure It’s Somewhere You’ll Be Happy.

When you’re thinking about buying a home, it’s important to research the area. You want to make sure that the home you buy is somewhere where you’ll be happy and feel safe.

The first thing to look at when researching an area is local amenities – what shops are nearby? What restaurants are there? Are there parks or sports centres nearby? Is there a library or swimming pool within walking distance? These things will help give you an idea of what the community has to offer outside of work hours, which can be important when choosing where to live.

Secondly, take a look at schools. Schools can have a big impact on property prices so it’s worth checking out if there are any good ones nearby before making any decisions about where you want your children’s education to take place! Thirdly also consider transport links – does public transport run frequently enough for your needs? Do buses go past often enough during rush hour times (if applicable)? Or do trains stop running late into the evening hours (if applicable)? These factors may influence whether or not certain areas suit different lifestyles better than others do so bear them both in mind while making these decisions too!

It’s important to research and get the right advice when buying your first home. The market changes all the time so it’s best to find out how many properties in your area are selling for now, not how much they were selling last year or even six months ago. It can be tempting to rush into buying something if you see something you like at a good price but it might not be such a bargain after all when you factor in what repairs will cost or how long it will take to sell again if prices fall further down the line!

3. Find a Lender Who Suits Your Needs.

If you’re looking for a mortgage, it’s important to find a mortgage lender who offers the right products and services for you. Look for a lender that has been around for at least 10 years and has been regulated by the Financial Conduct Authority (FCA). This means they have met certain standards of service and are accountable if things go wrong. It also shows they’ve been around long enough to know what they’re doing!

4. Talk to a Mortgage Advisor.

One of the first things to do is to work out what you can afford. It is worth looking closely at all of your income and expenditure before speaking to a mortgage advisor so you don’t miss anything that will catch you out later. Download our free living expense planner to get you started. Online calculators will give a guide on what you can borrow, but to fully understand your affordability including income and outgoings, it is useful to speak to a mortgage advisor. You’re probably aware that a mortgage advisor is someone who specializes in helping you find the right home loan. But did you know they can also help with other financial matters? A good mortgage advisor will be able to advise on:

Where and How Much to Borrow
.

How much deposit do you need (or don’t need) and from which lender.

Whether You Should Take Out a Fixed or Variable-Rate Home Loan.

A mortgage advisor can not only can they search for mortgage deals that are not available on the open market, but they can also improve your chances of being accepted for a mortgage as they’ll know which lenders are best suited to your particular circumstances.Take a look at our partner page to find a mortgage advisor who can help.

5. Don’t Rush Into Anything.

You may be excited to get onto the property ladder, but don’t rush into buying a house and then regret it later. Make sure you’ve taken the time to do all of the research and planning that comes with buying a home to be confident in your decision.

6. Have a Secure Job and Decent Credit Score Before Approaching a Lender.

If you want to buy a house, it’s important to have a secure job and a decent credit score before approaching a lender.

You need to be earning enough money to support yourself and your family. If the lender doesn’t think that you can afford the repayments on top of all your other monthly outgoings (like rent), then they might refuse your finance application. Most lenders will want to see consistency in your employment, so will usually ask for 6 months’ payslips.

Make sure that your income is sufficient for their requirements: if they want proof of two years’ worth of payslips from every employer since graduation, supply them with this information in advance so it doesn’t delay the completion of the paperwork or cause problems later down the line when paying off any debt secured against this property such as mortgage loans or car loans etc.

Pay off any outstanding debts where possible. Pay off credit with the highest interest rates first and work backwards. After paying bills each month, work out a budget that you can save and keep this money separate from your main bank account. Review any subscriptions and memberships to see if there are any areas you can save money each month.

Get a copy of your credit report (held by credit reference agencies such as Experian or Equifax) and look at improving your score by closing down credit card accounts which you no longer use, clearing outstanding debts, paying your bills on time and checking you’re on the electoral roll.

7. Sort Out Your Deposit

The bigger the deposit, the more likely you will be able to secure a lower interest rate. However, there are mortgages available at 95% loan-to-value (LTV). Ways to reduce the amount of deposit needed include putting a 5% deposit down, buying with a friend, a family member ‘gifting’ a deposit and taking advantage of first-time buyer schemes.

8. Take Advantage of Schemes For First-Time Buyers

If you can’t afford the deposit and mortgage repayments to buy the property you want, then you could consider a shared ownership scheme. This is where you can buy a proportion of the property up to 75%. You then pay rent to the provider on the rest. The benefit of shared ownership is that you need less money to buy. Also, the loan is interest-free for the first five years. However, if the housing provider owns 20% of the property initially when you come to sell, they will still be entitled to 20% of the value, so this is something to bear in mind.

The Government First Homes Scheme offers eligible first-time buyers in England the opportunity to buy new build homes for 30% to 50% less than their market value. This applies to a new home or a home originally bought as part of the scheme. One thing to bear in mind is that you can only sell the home to someone who is eligible to buy a First Home and you must give them the same percentage discount that you got, based on the home’s market value at the time of sale.

In April 2021, the Government launched an initiative called the Mortgage Guarantee Scheme, meaning you can put down just a 5% deposit and the Government will provide a guarantee to mortgage lenders on the portion of the mortgage between 80% and 95% of the property value. The current scheme is subject to participating lenders and is due to end in December 2022, although some lenders have urged the Government to continue the scheme.

Lifetime ISA

If you’re a first-time buyer aged 18 to 39, you could get up to £32,000 from the government by opening a Lifetime ISA (LISA). You can save up to £4,000 a year into a LISA, either as a lump sum or by putting in cash when you can. Then the state will add a 25% bonus on top if you use it towards your first home (or retirement). So, if you save the full £4,000, you’ll have £5,000.

The Help To Buy Equity Loan means you need to put down a 5% deposit and the rest of the purchase price comes from a combination of a mortgage, and a government loan of up to 40% for London properties or 20% outside London.

For most Government Schemes eligibility criteria apply so visit the Government website for more details on the schemes listed.

9. Don’t Underestimate the Costs Involved in Buying a House

It’s easy to get carried away when you are buying your first home. The excitement of having your own place can make it seem like a lot less than it is. But don’t underestimate the costs involved in buying a house, including solicitor fees and stamp duty.

Stamp duty is a government tax on the purchase of a property and is payable in addition to the purchase price of the property. First-time buyers are exempt from stamp duty below £425,000.
Know what you’re buying and how much it will cost to run on an annual basis – often this far outweighs the actual price of the property itself!

If you are looking at buying your first home, you must know what kind of costs there are associated with running one. A good way of doing this is by using an online service such as https://www.rightmove.co.uk/. Here are some examples:

Council Tax – this varies depending on where in England or Wales you live but averages around £1,200 per year (https://www.gov.uk/council-tax-rates). If the property has more bedrooms than required by law then this will increase accordingly as well

If you’re thinking about moving up from renting then make sure that owning feels right for everyone involved – including any pets who may need special accommodation too! Houses come with many hidden costs such as utility bills which can quickly add up so think carefully about whether these costs would work out cheaper than living somewhere else instead.

Conclusion

So there you have it, our tips for buying your first home. Hopefully, we’ve given you some useful information on how to get started on the property ladder and avoid some common pitfalls that can ruin even the best-laid plans. Remember that every journey is different!

If you have any questions, please get in touch.