As a first-time buyer, it’s important to understand the details of purchasing your first home. This guide will take you through the entire process, covering it all from saving your deposit to applying for a mortgage.
A lot of research is needed when planning to get your foot on the property ladder, ensuring that every part of the process has been thoroughly thought out and prepared for.
Firstly, you must save for your deposit. This is usually at least 5% to 20% of the cost of your home. To evaluate on this, if you had to pay £150,000 for your home, you would need to save at least £7,500 which is 5% of the overall cost. However, if you choose to save over 5% of the price, you would have a greater access to a range of cheaper mortgages.
Secondly, an element which is commonly overlooked in the process of buying a home is the long term payments which need to be considered. The affordability of a house extends far beyond the initial price therefor, it’s important to manage the additional costs of the home, such as:
- Survey costs
- Removal costs
- Mortgage arrangement and valuation fees
- Furnishing and decorating costs
- Stamp Duty
- Solicitor’s fee
(Note that first-time buyers do not need to pay stamp duty tax for the first £300,000 for properties that cost up to £500,000.)
Collating a budget before you begin your house-hunt is a wise step, as there are strict background checks for aspiring homeowners regarding the ability to make payments if interest rates were to rise or if the circumstances changed, such as starting a family or making a large investment. It is a standard procedure for the mortgage application process to provide the lender with evidence of financial outgoings and proof of income.
For extra support throughout the purchasing process as a first time buyer, there are several schemes which are backed by the government and aimed at helping home-buyers get a foot on the property ladder:
- Help to Buy – equity loans
- Shared ownership
- Home Ownership for People with Long Term Disabilities
- Older People’s Shared Ownership
- Right to Buy
It is also important to consider the area and the market status before committing to owning a home. The UK property market is constantly changing depending on local wealth, job availability and the ongoing political debates surrounding Britain.
The house prices are set to rise within the upcoming months and industry experts have stated that if you are looking to move-house, it should be done sooner rather than later, in order to beat the Brexit deadline in October. On the contrary, it is impossible to determine the outcome of the vote, therefore there will be little opportunity to carry out your purchase completely protected from the political status of the UK.
As the house prices continue to fluctuate, it is encouraged to have everything else in place in order to purchase your first home. Using this guide to help you evaluate each step of the process and maintain a sufficient budget throughout could help to guide you through the introduction to home buying.