First-time Home Buyer Guide

We want to make your house-buying process as straightforward as possible. That’s why we’ve created this first-time buyers’ guide using the information provided by the Money Advice Service.

This guide takes you through the process of buying your first home, including saving for your deposit and applying for a mortgage. Remember, we’re on hand to offer advice and support at every stage of your home buying journey. If you have any questions after reading our guide, don’t hesitate to get in touch.

How much deposit do I need to buy a house?

Before looking at properties, you need to save for a deposit.

Generally, you’ll need to save a deposit of at least 10% to 20% of the cost of the home you would like.

For example, if you want to buy a home costing £150,000, you’ll need to save at least £15,000 (10%).

Saving more than 10% will give you access to a broader range of mortgages and may even help you get one of the cheaper mortgage options available on the market.

Budgeting for the other costs of buying a home

Apart from your monthly mortgage payments, there are additional costs you’ll need to consider when purchasing a home.

These include:

  • Survey costs
  • Solicitor’s fee
  • Removal costs
  • Buildings insurance
  • Initial furnishing and decorating costs
  • Mortgage arrangement and valuation fees
  • Stamp Duty (Land and Buildings Transaction Tax in Scotland, or Land Transaction Tax in Wales).

First-time-buyers don’t need to pay Stamp Duty on the first £300,000 for properties worth up to £500,000. Please see this link for more information on the new Stamp Duty holiday the Chancellor has outlined which will run up until 31st March 2021.

Making sure you can afford your monthly payments

As a first-time homebuyer, an essential thing to bear in mind is whether you can afford to take this step.

It’s wise to put together a budget before you start looking for a property so that you know exactly what you can afford to spend on both your initial deposit and your monthly mortgage payments.

The mortgage application process

As part of your mortgage application, lenders will check you can afford the mortgage. They’ll also ‘stress test’ your ability to make your payments if interest rates were to rise or if your circumstances changed, such as a planned retirement date or if you started a family.

When you apply for a mortgage, you’ll need to provide evidence of your income and any regular outgoings. This will help to show the lender what you can afford and confirm that you have a steady source of income to support your mortgage payments. You’ll need to supply evidence of the following:

  • Debts
  • Household bills, and
  • Other costs, such as clothing, childcare and travel

To prove your income, you might have to produce payslips and bank statements.

If you’re self-employed, you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.

Affordable homebuyer schemes

Several government-backed schemes give home buyers a helping hand onto the property ladder. These include:

If you can use one of these schemes, lenders will still want to ensure you can afford to pay your mortgage.

Finding a mortgage

There are many mortgage deals to pick from, so choosing the right one for you can be tricky. The right mortgage deal for you will depend on several things, including your monthly income, regular outgoings and personal circumstances.

It’s a good idea to do some research and talk to experts such as mortgage brokers – Samuel Estates can put you in touch with some Independent Financial Advisors (these are known as ‘IFAs’). 

Freehold or Leasehold

If you want to buy a house, you’ll likely buy the freehold, meaning you own the property and land it sits on.

If you’re buying a flat, you’ll be buying leasehold, or buying into a share of the freehold.

If you have any questions over whether your property is a freehold or leasehold, ask a member of our team. We’ll be able to talk you through the ins and outs and help you understand the property-buying process.

Someone else can guarantee your mortgage

If you’re struggling to get a mortgage to buy your first home, you might want to consider a guarantor mortgage.

This means a parent, guardian or close relative takes responsibility for paying the mortgage if you can’t.

Guarantor mortgages shouldn’t be entered into lightly. They’re legally binding arrangements.

Your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.

You’ll need to talk to a mortgage broker to find out more about which lenders offer guarantor mortgages. Samuel Estates can put you in touch with some Independent Financial Advisors (these are known as ‘IFAs’).

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