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