First-time Buyer Mortgage Advice and Calculator

Becoming a first-time homebuyer is a moment that you will never forget. And, here at The Mortgage Genie, we can help make the whole process as simple as possible so you can enjoy the moment without any worries.

We will take care of you from the moment you begin looking for your dream home to your moving day, and throughout the duration of your mortgage. Our dedicated support and service team will help you find the best deal for you, and offer tailored advice suited to your circumstances. Plus, we can get you a deal three times faster than usual!

We will manage your application and keep you updated at every stage in order to ensure a smooth process. You will also receive expert guidance through some of the more complicated aspects of securing a mortgage, which we have detailed below.

Now, let’s take a look at everything you need to know before buying your first property. Here’s what we’ll cover:

What is a first-time buyer?

Depending on your current or past circumstances, you may be wondering “am I a first-time buyer?”. And, if that’s the case, you certainly aren’t alone in your confusion. The first-time buyer definition isn’t always black and white, so you may need some extra information to work out whether you actually qualify as one.

Firstly, if you’re looking to buy on your own and have never owned a home anywhere in the world, you will be considered a first-time buyer in the UK. This will also be the case if you’re buying with someone who’s in the same boat. However, if you’ve never owned a home but are buying with someone who has, you will lose your first-time buyer status.

There are some other factors to consider, too. For instance, if you’ve owned commercial property like a shop, this won’t have an impact on whether you’re a first-time buyer unless that property also came with living quarters.

Finally, you should also be aware that having owned a home at any time will have an impact on your first-time buyer status, even if you didn’t purchase the property yourself. This will affect anyone who has inherited property or had a home bought for them in the past.

How to buy a house as a first-time buyer in the UK

Now that you know whether you’ll officially be classed as a first-time buyer or not, let’s look at what your next steps need to be. Here, we’ll take you through the process of buying your first home and outline what you need to ask or keep in mind along the way.

Buying a house can be a lengthy and sometimes complicated process. But, if you have a sound understanding of the stages you’ll go through and the challenges you might encounter along the way, you’re likely to find it much easier. Here’s the process you’ll go through from start to finish.

1.Save your mortgage deposit

Your home buyer journey will typically start with you saving a deposit to put down on your first home. How much you’re able to save will depend on your earnings and circumstances, but it’s wise to save as much as possible to get access to the best possible mortgage deals. Some lenders offer 95% mortgages, which means you’ll need to save at least 5% of the price of the property you wish to buy but, ideally, you should aim to save 10–15%.

As a first-time buyer, you may also have the option of using a government-backed scheme to boost your savings. For example, if you’ve saved 5%, the government offers equity loans that can bolster your deposit and give you access to better mortgage deals, while you can put up to £4,000 per year in a Lifetime ISA and the government will add a 25% bonus to help you save for your first home.

 

2.Find out how much you can borrow

Once you’ve saved your deposit and you feel ready to buy, you’ll then need to find out how much you can afford to borrow. There are a number of factors mortgage providers will take into account when working this out, including the size of your deposit, how healthy your credit score is, and how much you’re earning at the moment. Lenders will also assess the finances of anyone else you’re planning to buy with.

Here at The Mortgage Genie, we have a mortgage calculator that can help you to get a rough idea of how much you’ll be able to borrow, or you can speak to one of our mortgage brokers who will help you through the process of discovering how much you’re eligible to borrow.

3.Apply for a mortgage agreement in principle

Once you have an idea of how much you’re going to be able to borrow, we would always recommend applying for a mortgage agreement in principle (AIP). This provides confirmation from a mortgage lender to say they’re willing to lend you a certain amount to buy your first home.

While some homebuyers skip this step, having an AIP can make you more attractive as a prospective buyer because it will show sellers and estate agents that you can definitely secure the money you need to purchase their property.

4.View properties you’re interested in buying

Once you have an idea of what you can afford, you can start looking for properties with the intention to buy. And, whenever you spot a home that you like the look of, it’s vital that you arrange to view it in person.

Visiting homes you have your eye on will give you a much better understanding of the condition they’re in. Plus, it’s much easier to get an idea of whether a property meets your needs when you visit in person. If you find a home you like, it’s also wise to visit it more than once and at different times of the day, as this will make it easier to spot potential problems, like noisy roads or train lines, and a lack of sunlight in the garden.

5.Make an offer

If you find a property you would love to live in, you’ll then need to put in an offer. It’s common for homebuyers to offer below the asking price of a property they’re interested in but, if you’ve chosen a home that’s particularly popular, you may need to offer the asking price or more. We’ll discuss how to negotiate later in this guide.

Once you’ve settled on an offer, you can call the estate agent or speak to them in person. It’s a good idea to put your offer in writing, too. Mention any factors that might help you to stand out, such as how you’re a first-time buyer with no chain, and that you’re looking to move as soon as possible. You should also mention that your offer is subject to a survey and the property being taken off the market, as this will reduce the risk of someone sweeping in with a better offer.

6.Apply for a mortgage

Next, it will be time to apply for your mortgage. At The Mortgage Genie, our mortgage brokers can take a lot of this process off your plate and ensure you’re getting the best possible deal from a reputable lender.

There are different types of mortgages you can apply for, and you’ll also need to decide how long you want to spend paying your mortgage off. This is known as the mortgage term and most borrowers choose to pay theirs off within 25 years.

7.Choose a conveyancer or property solicitor

Once your offer has been accepted, you’ll need to go through the legal process of conveyancing. In England and Wales, this involves carrying out searches, drawing up contracts, speaking to the Land Registry, and paying any stamp duty if applicable.

You can enlist the help of a conveyancer who specialises in property but isn’t a qualified solicitor, or you can speak to a solicitor — just make sure you check that they have recent experience with property law.

8.Arrange a property survey

You’ll then need to arrange a property survey, as this will assess the condition of the building you’re looking to buy and detect if there are any structural issues. Although this step is optional, you’ll want to be aware of any problems before buying so you can ensure you’re buying the property for a fair price and are prepared for any repairs that might need to be carried out.

If any significant problems are found at the survey stage, this could even enable you to negotiate the purchase price down, or you could request that the seller fixes the issues.

While a valuation survey will be conducted by your lender to check the general value of the property you’re hoping to buy, a house survey is designed to help you discover any faults. So, it’s important that you arrange for a property survey to be conducted independently so you can ensure you have all of the information needed to make a smart purchase.

9.Take out home insurance

When you come to exchange contracts, it’s vital that you already have buildings insurance in place. In fact, most mortgage lenders won’t allow you to borrow without it. This is because you’re legally obligated to purchase the property from the moment contracts have been exchanged so, if something were to happen to your new home between exchanging contracts and completing without you being insured, you wouldn’t be covered.

It’s worth noting that, if you’re buying a new-build home and are therefore the very first owner, your insurance policy doesn’t need to begin until your day of completion.

10.Exchange contracts

The exchange of contracts will happen when your legal representatives and those of your seller swap signed contracts and you pay your deposit. For this to happen, you’ll need a number of things in place, such as your written mortgage offer, an agreed completion date, and your building insurance either prepared or in place.

Once the contracts have been exchanged, your agreement to buy the property is legally binding, so the chances of the sale falling through will be incredibly small.

11.Complete and pick up the keys

Completion is the last stage in your home buying process and it will typically happen around two weeks after you exchange contracts. Although, you can agree on a convenient date that works for both you and the seller.

On completion day, the money will be transferred to the seller and you’ll be able to pick up the keys. The house will now be yours, and you can enjoy it!

While buying your first home may seem complicated, a number of the steps will be handled by the likes of your mortgage broker or solicitor, and there’ll always be someone to hold your hand through each step in the process of getting a mortgage. So, although it may seem daunting, there’s nothing to worry about.

How long does it take to buy a house?

Buying a house will typically take three to six months. However, it can vary a lot from move to move, as it will entirely depend on your circumstances and those of your seller.

There are a number of factors that can extend the length of time it takes you to complete. For example, you may not find a house you love immediately, you may choose to negotiate with the seller, or problems may be discovered at the property survey stage. But being a first-time buyer can also help to speed things up as you won’t need to sell your own property before moving.

The costs of buying your first home

There are a lot of costs associated with buying your first home. Here, we’re going to look at what you can expect to pay for, and how much everything tends to cost so you can budget accordingly.

What is the average first-time buyer’s deposit?

In 2020, the average first-time buyer’s deposit was £57,278 [PDF]. No doubt influenced by the effects of the Covid-19 pandemic, this is a 23% and £10,829 increase on 2019’s average, which was £46,449.

If you’re looking to buy in London, the average first-time buyer deposit was significantly higher in 2020. It has risen by £20,211 (18%) from £110,145 and is now £130,357.

What is the average first-time buyer house price?

The average house price paid by a UK first-time buyer in 2020 was £256,057. In 2019, the average was £233,118, so we’ve seen an increase of £22,939 (10%).

In London, the average price paid by first-time buyers was £489,098, which is a £33,486 (7%) increase on 2019’s average of £455,611.

Do first-time buyers pay Stamp Duty?

As of 1 July 2021, if you’re a first-time buyer in England or Northern Ireland, you’ll pay no Stamp Duty on a home priced up to £300,000. If you’re buying a property worth up to £500,000, you won’t pay any Stamp Duty up to £300,000 but will pay Stamp Duty at the relevant rate of 5% up to £200,000.

However, if you’re buying a property that’s worth more than £500,000, you won’t qualify for first-time buyers’ Stamp Duty relief and will need to pay the standard rates. These can be found on the government website.

What additional costs will be involved in buying your first home?

It’s not just your deposit, mortgage, and potentially Stamp Duty that you’ll need to keep in mind when buying your first home. There are other costs — some obvious and some less so — that you’ll need to budget for. Let’s take a look at what those are.

  • Mortgage arrangement fee: Sometimes called a Completion or Booking Fee, this is an administration charge made by lenders. This can range from a couple of hundred pounds to 1% of your mortgage’s value.
  • Valuation fee: When you apply for your mortgage, your chosen lender will typically charge a valuation fee to check how much your desired property is worth. The cost can vary from lender to lender, but you should budget for around £250.
  • Cost of a survey: As previously mentioned, as well as getting a valuation from your lender, you should arrange an independent survey to check there are no significant problems with your chosen property. This can cost £400–700.
  • Legal fees: You’ll also need to pay to cover all of the legal fees associated with buying your home. Some lenders will cover these, but only if you go with one of their chosen solicitors. If you choose to use your own, you should budget for around £1,000–£1,500.
  • Removal costs: If you’re going to need some help with moving all of your belongings into your new home, you’ll need to pay a removal company. Costs can vary wildly depending on how far you’re moving and how much you’re taking with you.
  • Mortgage broker fees: To get the best deal on your mortgage, you’ll want to enlist the help of a broker. This can cost up to £500, although some are fee-free and will earn commission from lenders instead.

If you would like more information about the fees associated with buying your first home, make sure you read our guide to mortgage fees and charges. We’re also well-versed in helping our clients to navigate all of the costs that come along with buying a new home, so get in touch if you would like our support.

How to negotiate your house price

Once you’ve found a house you love, it can be tempting to offer the asking price or even more to secure it. However, you need to ensure that you’re paying what the property is worth, getting a good deal, and securing a mortgage with monthly repayments you can comfortably manage.

So, here are some top tips for negotiating the price of a property as a first-time buyer.

Research the market

The key to getting a good deal on a new home is to know the market. You should do your research to find out what prices homes in the same area are selling for, what you should be able to get for your money, and how long local homes are typically staying on the market.

If you know houses nearby aren’t selling very well, or the property you’re looking at is overpriced compared to others in the area, you’ll typically have more room to negotiate.

Get to know the seller

The seller’s situation can also have a big impact on how successful your negotiations are likely to be. For instance, if your seller already has a property to move into and is therefore desperate to move, they may be more willing to drop their price. You should use every possible chance to get to know your seller and their circumstances, so make sure you make an effort to chat to them at any face-to-face viewings.

Sell yourself

You should also ensure that you sell yourself to the seller, as this will increase the chances of your lower offers being accepted. You should stress the advantages of your situation, like the fact you’re a first-time buyer so come with no chain. It’s also a good idea to let the seller know if you have a mortgage approved already or you’re a cash buyer so won’t need a mortgage at all.

Start low

Sellers will expect prospective buyers to offer less than the asking price at first, so the price will have been set with this in mind. So, as long as your offer is well-researched and reasonable, don’t be afraid to start low. You can always raise your offer if it isn’t accepted, but you typically won’t be able to bring it down. You need to keep this in mind.

Take your survey into account

When your independent survey is conducted, you may find that there are problems with the property that you weren’t expecting to deal with. At this point, if the issues aren’t a deal-breaker, you’ll need to consider whether you want to make the repairs yourself once the home is yours, or you would rather the seller fixed the problems before selling. You could also adjust your offer with the new information in mind, outlining why you think the reduction in price is warranted.

Ask for the inclusion of items you need

As a first-time buyer, you may not have essentials such as your own washing machine or fridge. In this situation, you could save money by asking the seller to throw in some of these items if they aren’t willing to lower the price of the home itself. Your seller might have been dreading moving bulkier items to their new property, so they may even feel like you’re doing them a favour!

Questions to ask when viewing a house

As a first-time homebuyer, viewings might seem daunting. You want to make a great impression, collect all of the relevant information, and ensure you’re making a good decision, after all. Asking the right questions at your viewings will give you the best chance of finding a home you’ll be happy in, so here are some of the main queries that will provide you with the information you need.

  • How long has the house been up for sale?: The answer to this question can be very revealing. If your desired property has been on the market for more than three months, ask why. There could be a problem you’re not yet aware of, or it may be overpriced. It could also indicate the seller would be willing to drop the price.
  • How long have the sellers lived here?: If the sellers of a property haven’t lived there long, it could be a red flag. Meanwhile, if someone has lived in a house for a long time, they may be more interested in selling to someone they like. So, turning on the charm could make a huge difference.
  • Is there a chain?: Before putting an offer in on a house, you’ll want to get an idea of when you might be able to move in. If the seller hasn’t found a property to move into yet or they’re in a chain, the process could take much longer. So, it’s something that’s worth keeping in mind.
  • What’s the area like?: Of course, you should thoroughly research an area before viewing houses in the vicinity. But speaking to people who actually live there can also give you a whole new perspective. Whether you want to know more about the local schools or nightlife, make sure you ask the seller for their opinion.
  • What work has been done on the property?: If any significant work has been done on your desired property, you need to check everything is above board. Ask to see builders’ receipts, proof of planning permission, and any relevant guarantees. You don’t want any poorly planned or executed renovations to become your problem.
  • What will be included?: You’ll want to know exactly what you’re getting if you choose to buy a property. So, ask about any fixtures and fittings, furniture, and white goods. As a first-time buyer, getting any furnishings thrown in could save you a lot of money when you’re just starting out.
  • What are the neighbours like?: You’ll want to know about any disputes a seller has had with your prospective neighbours, and they’re legally obliged to tell you if you ask.
  • What is the internet access like?: These days, internet access is a necessity for daily life. This means, before putting an offer down on a house, you should ask what the access is like. Rural homes, in particular, can come with bad phone service and a poor internet connection, so it’s always worth asking about!
  • Can I see the Energy Performance Certificate?: Legally, the seller or estate agent must make sure that an Energy Performance Certificate is available. This will give you an idea of your desired property’s energy efficiency and how high the energy costs are likely to be.
  • What is the water pressure like?: For some homebuyers, poor water pressure is a deal-breaker. If this is the case for you, don’t forget to ask about it! We would also recommend turning a tap or the shower on to check it’s up to your standards.

These questions will cover most bases for the majority of prospective buyers. But, depending on your priorities, there may be more information you need. So, make sure you put together a list of queries before each viewing so you don’t forget anything and are sure to leave with the details you require to make an informed decision.

First-time buyer mortgages

As a first-time buyer, there are a number of mortgage types you can choose from, and your monthly repayments will depend on the size of your loan as well as the kind you choose. Here are the main options you’ll typically want to consider.

  • Fixed-rate mortgages: With a fixed-rate mortgage, your monthly repayments will stay the same for two, three, or five years. Some lenders even offer a fixed rate for 10 years, although they are rare. Once your initial deal comes to an end, it’s usually best to switch mortgages to avoid paying your lender’s standard variable rate (SVR), which is likely to be much higher.
  • Tracker mortgages: With a tracker mortgage, your interest rate will fluctuate with the Bank of England base rate. You should only go with this option if you know you’ll still be able to comfortably meet your monthly repayments if interest rates rise.
  • Discounted variable-rate mortgages: A discounted variable-rate mortgage will usually last two to five years, and will be fixed at a set percentage below your lender’s SVR. While discounted, your repayments will still rise if the SVR does.
  • Offset mortgages: An offset mortgage will allow you to link your mortgage and a savings account to reduce the amount of interest you are charged. It works by offsetting your savings account against the amount you borrowed, so you are only charged interest on the difference. For instance, if your linked savings account contained £15,000 and you had a mortgage of £100,000, you would pay interest on £85,000 rather than the whole mortgage.

Different types of mortgages work best for different situations. A broker can help you to choose the product that will suit your needs.

How can families help first-time buyers?

With house prices continuing to rise and deposits getting much larger, some first-time buyers may need their family’s help to get on the property ladder. If you’re in a position to help a loved one with this, you may be wondering what the best approach will be.

One of the most common ways you can help a family member to get on the property ladder is by gifting them some money to put towards their deposit. The buyer will need to make their lender and solicitor aware that some or all of their deposit has been gifted and you’ll typically be required to sign a gifted deposit letter to confirm the money does not need to be paid back and you hold no stake in the property.

Alternatively, you may be looking to sell a property you own to a family member. If so, you can gift equity to them so they will need a smaller deposit. In fact, it can negate the need for a deposit at all, as the equity will be considered the deposit.

If you need any help with a family concessionary purchase, The Mortgage Genie can help. Our expert team is here to talk your family through all of your options so you can ensure you make the best choice.

First-time buyer mortgage calculator

You now have all the first-time buyer mortgage advice you’ll need to purchase a house you love and get a great deal. All that’s left to do is work out how much you can afford to borrow.

Here at The Mortgage Genie, we have a mortgage calculator that requires just a few simple details to provide you with an idea of how much you could be eligible to borrow. If you’re looking to get on the property ladder, our calculator is a great place to start.

And, if you would like any support with getting the best deal and applying for your mortgage, our brokers are here to help! We’ve helped a lot of first-time buyers to purchase their first properties and we would love to do the same for you.

To get a personalised quote, fill in our contact form with some details, and we’ll be in touch with your mortgage or insurance estimate. Alternatively, contact our team and we can discuss your needs today.