First Time Buyer Advice


Buying a house might seem like a daunting process for those who have never been involved with it before. We have come up with guidance for first time buyers, and how to prepare for getting on the property ladder.

The property process is regarded as a lengthy process. For you to buy potentially your most expensive asset, it is important that everything is done correctly with no mistakes.



  • What is a property chain?

    • Property processes get complicated when chains are involved. A property chain describes the line of buyers and sellers all linked together because each of them is selling and buying a property from one of the others. The chain begins with someone who is buying not selling (first time buyers, investors etc) and ends with a vendor who is only selling, not buying.
  • Deposits and finances

    • Your deposit is essentially a wedge of money that goes towards the cost of the property you are buying. Generally, a larger deposit tends to give you access to a wider range of mortgages. Study the amount of deposit you have for your first house and consider the benefits of borrowing some finances from family or selling some assets to get a larger deposit.

      More often than not, you need to try and save at least 5% to 20% of the cost of the home you’re looking to purchase. For example, if you’re looking to purchase a property for £150,000 you may need to save at least £7,500 as a deposit.
  • Mortgages

    A mortgage is a loan to buy property or land. The loan is secured against the property until it is fully paid off. If you cannot keep up with your repayments, the lender can repossess (take back) your home and sell it to get their money back.

    Think about what you can afford. When considering your monthly repayments, think about the running costs of owning a home such as household bills, council tax, insurance and maintenance. When applying for a mortgage, lenders will want to see proof of your income and certain expenditure, and if you have any debts. Lenders also need to be assured that you can keep up repayments if interest rates rise.


  • Mortgage in principle

    • We recommend securing a 'mortgage in principle' before offering to purchase a property. Having a decision in principle shows that you can, in theory, afford to buy the property. This could make you a more attractive buyer and stand you apart from other prospective buyers.

      What is a mortgage in principle?

      A mortgage in principle, also known as a 'decision in principle', a 'mortgage promise' or an 'agreement in principle', is a certificate or statement from a lender to say that, ‘in principle’, they would lend you a certain amount.

      How do I get a mortgage in principle?

      To obtain a mortgage in principle, you can approach a mortgage lender directly or via a mortgage broker. This can be done online, by telephone or in person. We personally recommend having a face to face consultation as this is an important decision.

      To receive a mortgage in principle, you will not need to go through the full mortgage application process. This will come later, when you’ve had an offer on a property accepted. You will generally be asked to provide your name; your date of birth; three years of address history; and your income and expenditure.

      You must make sure you've taken advice on products and lenders before you proceed with an agreement in principle, as getting one can leave a footprint on your credit file.

      Please remember that a mortgage in principle is not a guaranteed mortgage offer. The lender will need to look at your earnings and credit history in more detail when you go through the full application process.

      If you would like someone to compare the best mortgages for you and give you expert advice, then contact us on 01531 825736 and we will put you in touch with our recommended Mortgage Advisers.

  • Affordable home ownership schemes

    Affordable home ownership schemes

    You may be able to get financial help from the government to buy a home under the following schemes:
    • Shared Ownership
    • Help To Buy Equity Loan
    • Help to Buy ISA/Lifetime ISA
    • Right to Buy: buying your council home
    • Right to Acquire: buying your housing association home

    Shared Ownership


    You can buy a shared ownership home through a housing association. You buy a share of your home (between 25% and 75%) and pay rent on the rest.

    You can buy a home through shared ownership if your household earns £80,000 a year or less (or £90,000 a year or less in London) and any of the following apply:

    • you’re a first-time buyer
    • you used to own a home, but cannot afford to buy one now
    • you’re an existing shared owner
    Shared ownership properties are always leasehold and you can buy more shares of your home after you become the owner (this is known as staircasing). More information can be found at: https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-scheme


    Help to Buy Equity Loan


    You can receive a low interest loan from the government towards your deposit (known as an equity loan).

    The home you buy must:
    • be a new build
    • have a purchase price of up to £600,000 in England (or £300,000 in Wales)
    • be the only one you own
    • not be sub-let or rented out after you buy it
    With the equity loan:
    • you need a 5% deposit
    • the government will lend you up to 20% (up to 40% in London)
    • you need a mortgage of up to 75% for the rest (up to 55% in London)
    You must buy your home from a registered Help to Buy builder. More information can be found at: https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loan


    Help to Buy ISA

    Unfortunately, you can no longer open a Help to Buy ISA. However, if you already have a Help to Buy ISA, you can pay in up to £200 each month and the government will top up your savings by 25% (up to £3,000) when you buy your first home. You can pay into the ISA until November 2029 and the bonus can be claimed until November 2030.

    The home you buy must:
    • have a purchase price of up to £250,000 (or up to £450,000 in London)
    • be the only home you own
    • be where you intend to live
    The best bit? You do not pay it back! More information can be found at: https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-isa

    HERE 8 

    Lifetime ISA

    With the lifetime ISA, you can pay in up to £4,000 a year and the government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

    You can withdraw money from your ISA if you’re:
    • buying your first home
    • aged 60 or over
    • terminally ill, with less than 12 months to live
    You’ll pay a 25% charge if you withdraw cash or assets for any other reason. The withdrawal charge aims to recover the government bonus received and apply an extra charge to the original savings. This means if you treat your Lifetime ISA as a short-term savings product, you could get back less than you paid in.

    You can use your savings to help you buy your first home if all the following apply:
    • the property costs £450,000 or less
    • you buy the property at least 12 months after you open the Lifetime ISA
    • you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them
    • you’re buying with a mortgage
    More information can be found at: https://www.gov.uk/lifetime-isa

    HERE 9

    Right to Buy: buying your council home


    This scheme allows most council tenants to buy their council home at a discount (subject to meeting the eligibility requirements).

    You can apply to buy your council home if:
    • it is your only or main home
    • it is self-contained
    • you are a secure tenant
    • you have had a public sector landlord (for example, a council, housing association or NHS trust) for 3 years – it does not have to be 3 years in a row
    More information can be found at: https://www.gov.uk/right-to-buy-buying-your-council-home

    HERE 10 

    Right to Acquire: buying your housing association home

    Right to Acquire allows most housing association tenants to buy their home at a discount.

    You can apply to buy your housing association home if you’ve had a public sector landlord for 3 years. These landlords include:
    • housing associations
    • councils
    • the armed services
    • NHS trusts and foundation trusts
    Your property must either have been:
    • built or bought by a housing association after 31 March 1997 (and funded through a social housing grant provided by the Housing Corporation or local council)
    • transferred from a local council to a housing association after 31 March 1997
    • Your landlord must be registered with the Regulator of Social Housing.
    The home you want to buy must also be:
    • a self-contained property
    • your only or main home
  • Costs of buying a home

     Buying a home can be expensive. It is important to budget for the following:
    • Mortgage broker fees
    • Survey costs
    • Solicitor/conveyancing fees
    • Removal costs
    • Buildings insurance
    • Initial furnishing and decorating costs
    • Stamp Duty Land Tax (Land Transaction Tax in Wales)

  • Stamp Duty Land Tax (SDLT)

    • Property processes get complicated when chains are involved. A property chain describes the line of buyers and sellers all linked together because each of them is selling and buying a property from one of the others. The chain begins with someone who is buying not selling (first time buyers, investors etc) and ends with a vendor who is only selling, not buying.
  • Tenure

    Stamp Duty is a tax you pay the government when you do one of the following:
    • Buy a freehold property
    • Buy a new or existing leasehold
    • Buy a property through a shared ownership scheme
    • Are transferred land or property in exchange for payment, e.g. you take on a mortgage or buy a share in a house
    Your solicitor/conveyancer will usually submit your Stamp Duty Land Tax transaction return for you.


    What is the First Time Buyer’s Relief?

    Property or lease premium or transfer value  SDLT rate
    Up to £300,000  Zero
    The next £200,000 (the portion from £300,001 to £500,000)        5%

    If the price is over £500,000, you follow the rules for people who've bought a home before.



    Am I eligible for the First Time Buyer’s Relief?

    You are eligible for the First Time Buyer’s Relief if:
    • You, and anyone else you are buying with, are first-time buyers
    • The property will become your only or main residence
    • You complete your purchase on or after 22 November 2017
    Stamp Duty Land Tax (SDLT)



    Tenure



    Freehold

    When purchasing a house, it is likely you will be buying the freehold. This means you own the property and the land it sits on. Most houses (not the ones that have been divided into flats) are sold as freehold tenure. However, it is still important to check as there are approximately over 1 million leasehold houses in England.
    Buying freehold property means that you are the sole person responsible for any costs incurred to maintain the building or land.

    Leasehold

    When purchasing a flat, or some other properties, you may be buying a leasehold. This is the right to occupy land or a building for a given length of time. Typically, leases are between 99 and 125 years, though some can be for as long as 999 years and as short as 40 years. Before viewing a leasehold property, we recommend checking the length of the lease with the estate agent. If the lease has a short amount of time left, think carefully about whether to proceed. A period of less than 80 years is generally the point at which mortgage lenders consider the length of a lease will adversely affect the value of a property and its mortgageability. While some lenders may lend, not all will. Any lease of less than 70 years remaining can start to significantly affect the value of the property (compared to other properties with a longer lease).

    The cost of extending the lease with the freeholder can run into tens of thousands of pounds. If you wish to extend the lease, you must either wait until you have owned the property for two years, or (before buying the property) the seller can claim the right to extend the lease before passing this on to you when you purchase the property.

    There are some limitations of owning a leasehold property - you may have to ask permission to have pets, knock through walls, change aspects of the building and so on. Your solicitor/conveyancer will report the restrictions and covenants to you before you are legally committed to buying the property.

    You should also be aware of costly ground rents (the rent to be paid to the landlord) and maintenance fees (costs for the landlord maintaining the common parts of the building). We recommend checking these details with the estate agent before viewing the property. Your solicitor/conveyancer will ask for evidence of historical and future maintenance charges and projected expenditure (including major works) before you are legally committed to buying the property.


  • Our viewing recommendations

    Drive by

    (no, not the kind you’re thinking about)

    First Impressions are important, before viewing the property drive past it, get a feel of the neighbourhood. Have a listen for noise, look for any developments that could sway your decision. Get a feel for the area. If you like what you see, and you could see yourself living there, book a viewing!


    Create a list


    Create a mental list, or even a physical list. Include questions that you want to ask and get them prepared beforehand so that you don’t regret not asking an important question.


    Smile!

    Remember you’re creating a bond with the homeowner (or estate agent), if you’re happy and friendly, the process could run a lot smoother.


    Take a partner, parent or friend.


    Although the properties that we sell have been checked, it is important to take someone you know for safety reasons. Not only that, they may also ask good questions, spot important features or downfalls and give you a second opinion!


    Monthly Costs

    On many of the property portals such as Zoopla, Primelocation and Rightmove, you can see the average monthly costs of the property and even the average bandwith (WIFI) that you could potentially get. These are important to research as it should be included in your budgeting.


    Questions to consider asking the seller

    How old is the boiler?
    How old are the windows?
    What are the neighbours like?
    Why do you want to move?
    What work has been done recently?
    Have you had much interest?
    Have you had any problems obtaining buildings insurance?