First-time buying – a beginner’s guide

March 4, 2021
First-time buyers guide

First-Time Buying – A Beginner’s Guide

By Libby Foot

Looking to get your foot on the first rung of the property ladder? There’s a reason first-time buying is considered one of the most stressful life experiences. For many, entering the housing market for the first time can be frustrating and overwhelming. This article will break down the complex process of buying property into simpler stages. This overview should help prepare you for taking the first steps.

In this article we cover research for first-time buyers and how much deposit you will need to save for your first home. We also cover mortgages for first-time buyers and the extra costs you may need to factor in.

Jump to

  1. Researching your first home
  2. How much deposit will I need to buy my first home?
  3. What mortgages are available for first-time buyers?
  4. How much should I borrow?
  5. The extra costs of buying your first home

First-time buyers: a guide to buying your first home
Buying a home for the first time can be an exciting, but daunting experience.

Researching your first home

The bewildering process of first-time buying can be made a lot simpler with research. You will need to thoroughly explore the area you are considering. Many skip this step, especially if it’s an area they grew up in. It’s wise to research regardless, as when looking to buy you will need to consider things that may not have previously crossed your mind. This can include local amenities, parking, commuting times, nearby schools, crime rates, and flood risks.

Part of your research should also involve gathering information about your income and expenses. Applying for a mortgage will be a lot simpler if you’ve already worked out what is within your financial reach. Lenders will need to know how much you could realistically pay monthly and have confidence that you will be able to continue to make repayments. Your credit history will also be considered. By gathering this information beforehand and figuring out which mortgages you could be eligible for, you can save yourself any unwanted surprises down the line.

How much deposit will I need to buy my first home?

Generally, most mortgage lenders will need you to put forward approximately 5%-20% as a deposit. If you can save for a slightly larger deposit, it’s sensible to do so. Having a larger deposit means you’re often able to get mortgages with lower interest rates. It may take you a little longer, but it will (literally) pay off in the future.

Some mortgage lenders will express the terms of the mortgage using the loan-to-value ratio, often phrased as LTV. This simply refers to the percentage of the total property value they are willing to loan you. For example, if the LTV is 85%, your deposit will need to be 15%.

What mortgages are available for first-time buyers?

In this day and age, getting a mortgage isn’t as simple as just asking for one. Many mortgage lenders tend to be selective about how much they are willing to lend and to whom. Rejection isn’t uncommon. If you can improve your credit rating ahead of time, you may improve your chances. A good credit rating shows not only are you serious about buying property but that you’re financially prudent.

You will need to consider whether your repayments will fluctuate with inflation or if they will remain fixed for a certain period of time (i.e., Fixed interest or variable interest). Some mortgages will also allow you to overpay if you are able. If you’re overwhelmed, a mortgage broker can help with finding a mortgage that ticks your boxes.

You will need a property in place before you apply for a mortgage, but you can get a mortgage agreed in principle. This is sometimes referred to as an AIP. This is not a formal agreement and shouldn’t be taken as a guarantee. It is a speculative agreement based on a brief look over your finances. This can be useful if you haven’t yet found a property as it boosts a vendor’s confidence in your ability to purchase.

How much should I borrow?

Although it may reduce your buying options, we wary of over-stretching your finances. Buying a property is a substantial long-term financial commitment, but there will also be running costs for your new home. You may have been living in shared accommodation or living with your parents before buying your first property. The minute you take possession of your new home you will be responsible for all the utility bills including power, water and rates. You should also make sure you have enough to spare to spend on the finer things in life too.

The current rules around mortgages are there to help make sure that buyers only borrow what they can comfortably afford. You will have to go into a lot of detail about your income and spending with your mortgage adviser, but this is for your own benefit. The process enables the adviser or lender to recommend the mortgage that best suits your circumstances.

The extra costs of buying your first home

Saving for a deposit is just the first hurdle to overcome. There are additional costs that you will need to factor in. Extra costs can include valuation fees, conveyancing fees and stamp duty. Your lender may also require you to take out buildings insurance. It’s far easier to save initially and assume there will be extra fees, so they don’t surprise you.

This article is intended to be a springboard into the world of first-time buying. By having an overview of the initial stages, you will then be able to look further into the finer details. This guide to the initial stages should help clear some confusion if you are anxious about buying property for the first time.

We’re here to help

At House Fox, we’re always ready to help. If you are a first-time buyer and need more information about the process of buying your first home contact us, for a friendly no-obligation chat.

Other articles for first-time buyers

What should I do when viewing a house?
How to fall in love with your next home