Tips for First Time Buyers

Tips for First-Time Buyers

The dream of owning your first home might seem a little distant in today’s world, but it all starts with the right steps and a bit of planning. This guide will walk you through the essentials of buying your first place in the UK, including practical tips and what government assistance you may be able to access.

1. Build That Deposit

The first hurdle is saving for your deposit. You’ll typically need at least 5% of the property’s price. So, for a £250,000 home, you’d look to save £12,500. However, the bigger your deposit, the better. Mortgage lenders like seeing serious savings, and you’ll get access to more favourable interest rates.

With soaring property prices, the average deposit for first-time buyers in 2022 was around £62,500. If that seems daunting, don’t worry! The government offers a helping hand with the Lifetime ISA (LISA). Save up to £4,000 a year and get a 25% annual bonus (up to £1,000). The sooner you start, the bigger your bonus!

2. Know Your Credit Score

Mortgage lenders love reliable borrowers. While saving for your deposit, start polishing up that credit score. You can access free credit reports from major agencies like Experian, Equifax and TransUnion. Dispute any errors and keep your spending in check—this will directly impact your mortgage approval chances.

3. Tidy Up Your Spending Habits

Lenders assess your affordability, meaning your income versus your outgoings. Six months before applying for a mortgage, take a good, hard look at your bank statements. Subscriptions, expensive nights out or credit agreements can make your finances look less appealing to lenders.

4. How Much Can You Borrow?

Once you have a rough deposit amount, it’s time to explore how much you might qualify for on a mortgage. Get a “mortgage in principle”. This is where a lender gives you a general indication of the amount they’d be willing to loan based on your finances. This won’t affect your credit score and is a great tool to show estate agents you’re ready to buy.

5. Get Expert Advice

Don’t underestimate the power of a good mortgage broker! They can find the absolute best interest rates and terms for your situation, saving you thousands over the lifespan of your mortgage. Brokers are also up-to-date on specialised products like 100% mortgages, Deposit Unlock or Green mortgages.

6. Know Your Stamp Duty

First-time buyers get a bit of a break! In England and Northern Ireland, you don’t pay stamp duty on properties up to £425,000. If the property costs between £425,001 and £625,000, you’ll pay 5% duty on the amount exceeding £425,000. Scotland and Wales have their own rules, so be sure to check those separately.

7. Don’t Forget the Extras

Buying a property comes with additional costs. Legal fees, surveys and removal expenses are just a few. Then, once you’re settled, factor in new ongoing costs like ground rent, service charges, maintenance and utilities. Be prepared to budget for it all.

8. Contact Livin Estate Agents

Perhaps the most important tip of all is to get in touch with our fabulous team here at Livin Estate Agents. Like everyone else, you want the best deal possible, and it just so happens that we’re committed to ensuring just that. Give us a shout on 020 8050 2709 today to get started.