Helpful Tips for First-Time Buyers

Tue 12 Apr 2022

Ian Woodhouse-Smith, Lettings Manager

Buying your first home is an exciting time, but feeling daunted, confused and overwhelmed is normal, too. Here are some helpful tips to make the property-buying process easier for first-time buyers.

Plan your budget

The first step in the house buying process should be to plan your budget. You should do a full audit of your finances to work out how much you can afford and how much you could potentially borrow from a mortgage lender. Calculate your total income after tax, then work out all essential outgoings like food, rent, household bills, insurance and phone contracts.

If you need to save before you start looking for a house, you should assess all monthly outgoings and see if there’s any non-essentials that could be cut temporarily, whether it’s a gym membership, beauty treatments, eating out or clothes shopping.

If you’re buying a home with a partner or friend, don’t forget to factor in everyone's finances. See more of our tips for planning your budget here.

Save a deposit

Saving a deposit is the most important step to get on the housing ladder. If you’re applying for a mortgage, a deposit not only proves that you’re solvent and financially disciplined, but it also means that lending to you is less of a risk for the mortgage lender.

How much of a deposit do you need? You’ll often need a minimum deposit of 10 per cent to get the better deals, although the higher your deposit, the lower the interest rate and therefore the lower your monthly repayments. There are some 5 per cent mortgage schemes available to help first-time buyers.

Make use of government schemes

There are multiple government schemes in place to help first-time buyers enter the property market.

You could open a Lifetime ISA (LISA) to save for a deposit, where the government adds a bonus of 25 per cent onto your savings of up to £4,000 per year. If you’re buying with a partner, both of you can use your LISAs to purchase a property. LISAs can be taken out if you’re aged over 18 and under 40, and can only be used by first-time buyers.

Shared ownership schemes are available across the UK. With these, buyers take out a mortgage on a share of the property (between 10 and 75 per cent) and pay rent on the rest. The housing association decides who is eligible for this scheme based on your income and local property prices, with priority given to families and key workers.

There’s also a Help to Buy scheme for new builds – the Help to Buy equity loan scheme. With the equity loan, you need a minimum of a 5 per cent deposit and the government will give you an interest-free loan of 20 per cent of the purchase price (for the first five years).

Speak to a mortgage adviser

Once you’ve saved a deposit, you should arrange to speak to a mortgage adviser. Often, mortgage advisers’ services are free, plus they have access to mortgage deals that aren’t available on the high street. Your adviser will assess your financial circumstances and recommend the best deal for you. They’ll also give you an idea of how much you could borrow and can apply for an agreement in principle on your behalf.

You’ll then be ready to start your house hunt knowing exactly how much you can afford.

If you’re looking to buy your first property in the Alresford area, get in touch with the Hellards team today.