If you’re a first-time buyer wondering what you need to buy a house or flat, the following handy guide takes you through the process of buying your first home, including saving your deposit and applying for a mortgage.
How much deposit do I need to buy a house?
A person is generally classified as a first-time-buyer if they’re purchasing their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK.
Before looking at properties, you need to save for a deposit.
Generally, you need to try to save at least 5% to 20% of the cost of the home you would like.
For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5%).
Saving more than 5% will give you access to a wider range of cheaper mortgages available on the market..
Budget for the other costs of buying a home
Use this handy Stamp Duty Calculator to work out how much you’ll pay when buying your property.
Apart from your monthly mortgage payments, there are others costs when buying a home.
- Survey costs
- Solicitor’s fee
- Removal costs
- Buildings insurance
- Initial furnishing and decorating costs
- Mortgage arrangement and valuation fees; and
- Stamp Duty (0% up to £250,000.00)
.Make sure you can afford your monthly repayments
As a first-time home buyer, the most important thing to bear in mind is whether you can really afford to take this step.
It’s wise to put together a budget before you start looking for a property.
There are now strict checks when you apply for a mortgage.
Lenders will check you can afford the mortgage and ‘stress test’ your ability to make your payments if interest rates were to rise or if your circumstances changed, such as a planned retirement date or if you started a family.
As part of the mortgage application process you’ll need to show the lender evidence of any outgoings you have and prove your income.
Finding a mortgage
There are many different mortgage lenders and deals to pick from, so choosing the right one for you can be tricky.
It can depend on several things, so it’s a good idea to do some research and talk to experts such as independent mortgage brokers who have access to the whole of the lending market.
Freehold or leasehold
If you want to buy a house, it’s likely you’ll buy the freehold, meaning you own the property and land it sits on.
If you’re buying a flat (including some houses), you’ll be buying leasehold, or buying into a share of the freehold.
The mortgage application process
Whichever mortgage you apply for, your lender will want to know you can continue to make your repayments.
Even if interest rates rise, or as a result of any planned events affecting your financial circumstances.
You’ll need to provide evidence of your income, and provide information of your outgoings, including:
- Household bills, and
- Other costs, such as clothing, childcare and travel
To prove your income, you might have to produce payslips and bank statements.
If you’re self-employed, you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.
Once you have a mortgage offer, known as a mortgage in principle or decision in principle, present this to your estate agent when you make an offer, this will ensure you are a serious mortgage approved buyer to the agent and vendor.
Get in touch today on 01257 273324 or firstname.lastname@example.org and we can provide you with specialist, expert advice to support you through your home buying requirements.