First Time Buyer's Guide
Top Tips for First Time Home Buyers
New Build Guides
Advice for First Time Home Buyers
With an endless list of things to consider, moving house can be a very complex process, especially for first time buyers. From getting on the property ladder and finding the perfect property to saving for a deposit and applying for a mortgage – moving out for the first time can be extremely daunting.
Despite the uncertainty created by the COVID-19 pandemic and fairly dramatic house-price growth, Yorkshire Building Society estimates that first-time buyer volumes rose by 35% in 2021. In fact, the number of first time buyers has hit an all-time high since 2002. So, with more and more people getting their foot on the property ladder, what do they need to know before venturing into the world of home ownership?
The answer: a lot!
But, there is no need to worry! We have put together this first time buyers guide to make the process less stressful. In this guide, you will find plenty of advice and top tips for first time home buyers, helping you understand the house buying process from start to finish.
Hopefully, after reading our top tips for first time home buyers, you will know exactly what to expect when buying your first home. Check out our first time buyers guide and get answers to all your house-moving questions and concerns.
One thing everyone has to do when they move house is change their address across all their accounts and providers. This is something first time buyers often forget.
To make your first home move slightly less stressful, you can use SlothMove’s online change of address service to update your address across all services in one go – from your gym and your banks to the HMRC and DVLA. To make sure you don’t miss any important service providers, be sure to take a look at our address change checklist.
If you’re a first time buyer looking to update your address for when you move out, simply click below 👇
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What is a First Time Buyer?
The meaning of ‘First Time Buyer’ is someone who hasn’t previously purchased a property.
While the term ‘First Time Buyer’ may seem pretty self-explanatory, it is important to know who qualifies as a first time buyer and who doesn’t. This is because first time buyers qualify for certain benefits and schemes in place to help them get on the property ladder and buy a house. These first time buyer advantages can only be claimed if you meet certain strict criteria, though.
Working out who is a first time buyer and who isn’t should be pretty straightforward, but there are certain instances where someone might consider themselves to be a first time buyer only to discover that their mortgage lender or the government don’t agree.
For instance, what if you’re buying as a couple but one of you has bought a house in the past and the other hasn’t? Or, what if you’ve owned a home abroad? Or, inherited a property? Unfortunately, discerning whether you are a first time buyer or not is a little more complicated than you might have initially thought.
Here are some pointers to help you determine whether or not you can claim first time buyer status or not:
You’re typically considered a first time buyer if…
- You’ve never previously owned a home, either abroad or in the UK
- You only own, or have owned, a commercial property e.g. a shop or restaurant
- You’ve never previously owned a home, abroad or in the UK, and are looking to purchase a buy-to-let property
You’re probably not considered a first time buyer if…
- You’re buying a property with someone who owns, or has previously owned, a home
- You’ve previously inherited a property, even if you’ve never lived there and have sold it
- Someone else, who already owns their own home, is buying the property for you
How to Get on the Property Ladder
The first step to getting on the property ladder as a first time buyer is saving for a deposit. Taking those first steps to saving up to buy a house can be tricky but there are a number of things you can do to make it a bit easier:
- Keep track of your spending
- Have a budget
- Set savings targets
- Monitor your savings regularly to make sure you are on track
It is important to remember that small savings add up to something big in the long term.
However, you don’t have to do all the hard work by yourself. There are a number of Government initiatives and schemes to help first time buyers get on the property ladder, including Lifetime ISAs, Help to Buy schemes and Shared Ownership schemes.
What Do You Need to Buy a House?
In order to purchase a property as a first time buyer, you must be financially ready. This means that you must take a look at your current financial situation and see if you have everything you need to buy a house.
It is important that you figure out exactly what you can afford and ensure you have what mortgage lenders are looking for in a borrower.
Some of the basic requirements you’ll likely need to fulfil in order to be approved for a mortgage and buy your first house include:
- A minimum credit score of 620 for conventional loans, or 580 for FHA loans
- Good credit historyA debt-to-income ratio below 50%
- Proof of a reliable source of income
When looking at houses, make sure you ask all the necessary house viewing questions to ensure you know exactly what you’re paying for.
Mortgages for First Time Buyers
A mortgage is a loan specifically taken out to purchase a property. To get a mortgage, you’ll need to put down a deposit and then borrow the remaining money from a mortgage lender. You will then pay it back monthly across a period of around 25 years (although this can vary) until it’s fully paid off.
Before your mortgage application is accepted, your chosen lender will need to assess your current circumstances; looking into things like your salary, outgoings and your credit history to make sure you are financially ready to commit to such a long-term loan.
There are a few different types of mortgage that you can choose from. One option is a first time buyer mortgage, where the Government provides you with an equity loan so that you don’t need to borrow as much from your lender and will have a wider range of mortgage rates to consider. However, this will depend on whether you decide to take advantage of any first time buyer initiatives and which mortgage lender you choose to go with.
How Much Deposit Does a First Time Buyer Need?
First time buyers will need to save for a deposit of up to 5% or more of the property purchase price and borrow the remaining money from a mortgage lender.
While 5% is the minimum amount you should save for a deposit, it’s always a good idea to save a little more than this as it will give you access to a wider range of cheaper mortgage options and lower interest rates.
However, how much deposit a first time buyer needs also depends on where they are buying. For example, Greater London properties generally require the largest deposit for first time buyers. The average first time buyer deposit required for properties in Greater London in 2021 was £115,759. This was in contrast to an average first time buyer deposit in Yorkshire and the Humber of just £31,212.
5 Top Tips for First Time Buyers
- Look into first time buyer schemes – It is becoming increasingly difficult for first time buyers to get on the property ladder. So, make sure you take advantage of all the Government initiatives set up specifically to make this easier. It is important to understand the terms and conditions of each scheme so that you know how much funding you might be eligible for.
- Understand what you can afford – Before you start looking at properties, make sure you know your own financial situation and what you can afford. This is important so that you only look at properties within your budget. You don’t want to find your dream house only to find that it’s outside your price range.
- Be proactive – Solicitors, as helpful as they can be, tend to work to their own timescale. So, if you want to get your property purchase moving, make sure you call and email them regularly for updates. If the seller’s solicitors are slowing things down, don’t be afraid to chase them up.
- Look into home insurance – When you purchase a house, it becomes your responsibility to arrange buildings insurance. Sometimes it is unclear whether you will need to insure the premises from exchange of contracts or from completion. So, make sure you contact your solicitor to find out exactly when you’ll need to arrange this. As well as buildings insurance, you’ll want to consider getting contents insurance for all your belongings too. Additionally, if you own a car, you’ll also need to contact your car insurance provider to notify them of your change of address.
- Don’t forget about the extra fees – Although you might have been busy saving for a deposit, have you forgotten about the extra costs associated with buying a house? You should aim to set aside £1000-£2000 for all the necessary extras, including solicitors fees, removal costs and furnishing your new home.
In this first time buyers guide, we have given you all the advice and top tips any first time buyer could need to smash the purchase of their very first home.
Now, go ahead and take a look at where are the best places to live in the UK in 2022.
Find out more first time buyers guides here.
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