An individual is classified to be a first-time buyer if they are purchasing their first residence and have never previously owned a freehold property, or have a leasehold agreement in a property in the UK or abroad.
Saving for your deposit
Generally, you need to try and save at least 5-20% of the cost of the home. For example, if you want to buy a home costing £150,000, this would require you to save at least £7,500 (5%). If you are able to save more than 5%, you will have access to a more extensive variety of mortgages available. Check that your savings are working for you by researching and comparing savings accounts for the most competitive rate.
A budget for the other costs involved in purchasing a home
In addition to your monthly mortgage payments, there are other costs involved when buying a home. For example: survey costs, removal costs, buildings insurance, solicitor’s fees, the initial furnishing costs, decorating costs, mortgage arrangement fees, valuation fees and Stamp Duty. Although, Stamp Duty does not need to be paid on the first £300,000 for properties that are worth up to £500,000. At Lifetime Solicitors we understand that this can feel very overwhelming for first-time buyers, so get in touch with a member of our friendly team today who can make it easier for you.
Make sure the numbers add up
One of the most important pieces of advice to first-time buyers is to make sure you can afford to make the monthly mortgages repayments. Plan your budget out before you start looking for property to ensure you will have no repayment problems. Consider how you would adapt to situations, such as interest rates rising, if you wanted to start a family or if your own personal circumstances were to change.
Organise your important documents
Lenders will ask for evidence that you can make your monthly mortgage repayments. It is great practice to form the habit early of organising documents such as payslips and bank statements that provide evidence of your income and outgoings. These can be debts, household bills and other general costs. For self-employed individuals, you may be asked to present tax returns and business accounts dating back two tax years.
Research first-time buyer schemes
There are several home-buyer schemes designed to help first-time buyers onto the property ladder. Examples of which range from Shared Ownership schemes to Help to Buy.
Buy with friends or family members
There are several benefits to buying a property with another person, a trend that is becoming increasingly popular as UK house prices continue to soar. But like with anything, there are important advantages and disadvantages to consider. It can be a great help to share the deposit, mortgage repayments and maintenance costs. However, sharing ownership does have risks that you should consider, like financial complications of paying an equal share and the emergence of potential disputes between parties overpayments.
Thank you for reading.