Buying your first home is an exciting prospect but it can also be a stressful experience.
It is important to prepare for the journey ahead which will save you time. In this article, our panel mortgage advisors SRC Mortgage Solutions highlight some of the key topics that first-time buyers need to consider.
Who is a first-time buyer?
A person is generally classed as a first-time buyer if they are purchasing their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad. If you are making a joint application and one of you has previously owned a property, then you will not be classed as a first-time buyer.
Does being a first-time buyer make a difference when buying a home?
Yes and no. Some lenders will place extra requirements on first-time buyers as they deem their inexperience to be a slightly higher lending risk. On the other hand, many lenders will offer incentives to first-time buyers such as reduced arrangement fees or cashback.
Saving for a deposit
Before you start looking at properties, you need to save for a deposit. The minimum you will need is 5% of the purchase price but the more you can put down the better. If you are buying a shared ownership property your deposit will be based on the value of the share you are buying. For example, if you are buying a 50% share in a property valued at £300,000 then a 10% deposit would equate to £15,000. Find out more about Shared Ownership deposits.
Budget for other costs
As well as your deposit, you will need to set aside money to cover other costs associated with buying a home.
Here is a list of some of the things you may need to budget for:
• Survey costs
• Solicitor’s fees
• Mortgage arrangement and valuation fees
• Mortgage broker fees
• Removal costs
• Home insurance
• Initial furnishing and decorating costs
• Stamp Duty (although if you buy a property before 31 March 2021 you pay nom Stamp Duty on properties costing up to £500,000.
Make sure you can afford your monthly repayments
Lenders will check to make sure that you can afford the mortgage. They want to ensure that if interest rates rise in the future that you will still be able to make your repayments.
Before speaking to a lender or broker, write down a list of all the monthly expenses you expect to incur. You may need to do some research to estimate what you expect to pay for things like Council Tax, gas, electricity etc. Leasehold properties also have service charges and ground rent that you need to budget for.
Do not forget, if you are buying a shared ownership property you will also need to include the rent payments in your budget planner.
Take a look at our Shared Ownership guide packed with helpful tips to keep you informed throughout the purchase process.
Looking for a Shared Ownership home?
Peabody is one of the largest housing associations in the UK with a selection of Shared Ownership homes available throughout London and the South East. Take a look at our property search to find the perfect home for you.
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