First Time Buyers Guide
Buying your first home is an exciting milestone. As a first time buyer, you’re in a strong position with access to government schemes and no property chain to worry about.
If you’re ready to buy your first property, our guide for first time buyers offers everything you need to know, from how to prepare your finances to understanding the mortgage process. Read on to learn more.
Understand your finances
Before you begin your house search, you’ll need to prepare your finances. Here are some of the key financial aspects you’ll need to consider as a first time buyer.
Set yourself a realistic budget
Track your income and outgoings for at least three months to understand your spending habits so that you can budget accordingly. When you’re budgeting, don’t forget to include irregular expenses like holidays, car repairs or expensive times of the year, like Christmas.
Consider the 50/30/20 rule, where 50% of your income is for needs, 30% is for wants, and 20% goes towards savings. You may need to adjust this to boost your savings deposit. Ensure you select a sensible amount for each, leaving room for emergencies.
Start saving
Your deposit is likely the biggest financial hurdle you’ll face as a first time buyer. You can get mortgages with deposits as low as 5% of the property value, but you should aim for 15-20% of your home’s price. A larger deposit means lower monthly payments and better interest rates, so the bigger your deposit, the better.
Also, don’t forget to budget 3-5% of the property value for additional costs like solicitor fees, surveys, Stamp Duty and other moving expenses.
Consider setting up a Lifetime ISA
A Lifetime ISA (LISA) is a great way to boost your savings, as it essentially gives you free money towards your deposit. The government adds 25% to your savings (up to £1,000 per year on contributions up to £4,000). You can use it penalty-free for your first home worth up to £450,000, as long as you’ve had the account for 12 months.
Compare different LISA providers, as interest rates and terms can vary; some offer fixed rates, while others offer variable rates.
Check your credit report
Your credit score affects which mortgages you’ll be offered and the interest rates available. You can get a free report from Experian or Equifax, the main credit reference agencies. To improve your score, pay bills on time, keep your credit card balances under 30% of your limit, and avoid new credit applications before applying for a mortgage.
Read our guide offering 10 ways to boost your credit score for more information.
Plan for ongoing costs
Getting the keys to your new home is just the beginning – you need to budget for the ongoing costs of homeownership. Ensure you’re prepared to pay for the following:
- Monthly mortgage payments.
- Insurance.
- Council tax.
- Utilities.
Set aside 1-2% of your property’s value annually for maintenance and repairs and create an emergency fund for unexpected costs.
Prepare for the homebuying journey
From gathering essential documents to understanding the government schemes available to you as a first time buyer, here’s everything you can do to prepare for your homebuying journey.
Register to vote
Registering to vote is an easy way to improve your creditworthiness. Banks and lenders often use the electoral roll to help verify your identity and where you live. It has a positive effect on your credit score because it’s a reliable way to prove your identity.
Get your documents ready
Gather payslips, bank statements, proof of identity and other relevant financial documents. Having these ready can help speed up the mortgage approval process.
Explore government schemes
As a first time buyer, you have access to a range of incentives. Here are the main government schemes available:
- First Homes Scheme – A government scheme that offers first time buyers the opportunity to purchase a new build property for 30% to 50% less than the market value.
- Lifetime ISA (LISA) – The Government will give you a 25% bonus on top of the money you put in your LISA to put towards a property valued at £450,000 or less.
- Shared Ownership Scheme – If you can’t afford the full deposit and mortgage payments, this scheme allows you to buy a share of the property’s full market value.
- Help to Buy ISA – You can no longer open a Help to Buy ISA, but for those who already have one, you can claim a 25% bonus on your savings (up to £3,000) until November 2030.
Consider our other schemes
Alongside government help, we also have a range of low-deposit schemes to help first time buyers, including:
- Deposit Boost – If you have a 10% deposit, we could boost it by funding up to an additional 5% of the sale price, giving you a total deposit of 15%.
- Deposit Unlock – This scheme enables first time buyers to purchase a new build home with a 5% deposit.
- Kickstart – A shared ownership scheme, in association with Legal & General Affordable Homes, where eligible buyers can purchase up to 75% of a new build home, and pay a subsidised rent on the remaining share.
- Parent Power – If you’re receiving financial support from your family, we could pay you 5% of your property’s purchase price up to £15,000 on the date of legal completion.
Consider your property options
Decide what type of property you want to help narrow down your search. Consider whether you’d like a flat or a house, or if you’d prefer a new build over an older property. Research amenities and transport links in your chosen area, as this may affect what type of property you select.
Navigate property listings
Property listings can be overwhelming, but narrowing down your search will help you stay focused on what you’re looking for. Use estate agents, online platforms and developer websites to explore what’s available, and sign up for alerts for new listings that match your criteria.
Book house viewings
As a first time buyer, you may benefit from viewing a range of properties to understand more about what you’re looking for in your home. Here are our top tips to get the most out of each house viewing:
- Ask lots of questions.
- Schedule viewings at various times of the day to get a feel for the property.
- Check for structural issues and damp.
- Enquire about any energy-saving features the property may have, like insulation, heat pumps and solar panels.
- Take notes and pictures to remind you how the property looks, including how much natural light each room gets, and whether it’s north or south-facing.
- Create a checklist of the features you’re after and tick them off as you go.
- Allow extra time to explore the local area.
The mortgage process
Most people need a mortgage to purchase a property. As a first time buyer, here’s everything you need to know about the mortgage process.
Choose your mortgage type
Mortgage offers vary between different mortgage lenders and building societies. Research them thoroughly before deciding, comparing each lender’s interest rates, fees and customer reviews. As a first time buyer, look for a lender that specialises in first homes.
You’ll also need to decide between fixed-rate mortgages (where you pay the same amount each month) or a variable-rate mortgage (where your monthly payments may change based on the Bank of England’s base rate).
Our guide has more information on the mortgage types available.
Assess your Loan to Value
Loan to Value (LTV) is the ratio of the money you are borrowing compared to the value of the property. If you have a smaller deposit, you’ll have a high LTV ratio, which means you’ll likely be offered a mortgage deal with higher interest rates and bigger monthly payments. A larger deposit with a lower LTV usually results in better interest rates and lower monthly repayments.
Prepare for additional costs
There are various additional costs you should be aware of during the mortgage process, including:
Valuation fees
Lenders charge a valuation fee when they conduct a mortgage valuation. It’s a fee paid to assess a property’s value to ensure it’s worth enough to cover the mortgage amount.
Arrangement fees
This is an administration fee for the lender’s services in arranging your mortgage. It can be paid upfront or added to the mortgage amount.
Buildings insurance
Buildings insurance is usually compulsory if you’re buying your home with a mortgage. It protects you against the cost of repairing or rebuilding the property after any damage. Compare different companies’ policies to get the best deal.
Reservation fees
If you’re buying a new build Barratt Home, you’ll be required to pay a fee to reserve your property. This amount varies depending on the developer, but it’s often deducted from the final purchase price. It can be non-refundable in some cases, so check the terms before paying.
Stamp Duty Land Tax
First time buyers are eligible for special Stamp Duty Land Tax rates on properties up to £500,000. You’ll pay no Stamp Duty on homes up to £300,000 and 5% Stamp Duty on the portion between £300,001 and £500,000. For homes priced over £500,000, you’ll pay standard Stamp Duty prices above £500,000.
Conveyancing fees
Conveyancing is the legal process of transferring ownership of a property from the current owner to the new buyer. This process includes drafting contracts, conducting searches and finalising the purchase. The amount you’ll pay depends on a range of factors, including:
- The complexity of your house purchase.
- The price of your property.
- Where your conveyancing solicitor is based.
- Whether your property is leasehold or freehold.
Ensure you research thoroughly before deciding which conveyancing solicitor you’d like to handle your house purchase. As a first time buyer, look for one that specialises in first homes.
Finalising the purchase
Once your conveyancing solicitor has organised the legal side of your purchase, the final stage of buying a home involves two key steps: exchanging contracts, where you both become legally committed to the purchase, and paying your deposit. This is followed by completion day, when you pay the remaining balance and receive the keys.
Moving in
After making it to completion day, it’s time to organise your move and start making your house feel like a home.
Consider moving costs
Plan ahead and budget for your moving expenses, including:
- Removal company fees.
- Packing materials like boxes or bubble wrap.
- Storage costs, if needed.
- Utility setup fees for services like internet, electricity and water.
- A takeaway on moving day, so you don’t have to cook.
Top tips for settling into your new home
To help you settle into your new home and transition smoothly, here are our top tips:
- Create a checklist of essential admin tasks you need to do before moving day, including setting up your utilities and organising mail redirection from your old address.
- Meet your neighbours and introduce yourself.
- Locate important places like your nearest GP, pharmacy and hospital.
First Time Buyer FAQs
-
A first time buyer is someone who has never owned a residential property before, including those inherited or gifted.
-
There is no exact timeframe for how long the mortgage process takes, but it’s typically between 4 and 6 weeks. This will depend on the following:
- Your lender.
- If there are delays due to legal checks or missing documents.
- The complexity of your mortgage offer.
-
Your deposit should be between 5% and 20% of the price of the property you’d like to buy. Higher deposits often lead to better mortgage rates, so the bigger your deposit, the better. As a first time buyer, you also have access to a range of government schemes that may help boost your deposit.
-
In the UK, first time buyers may be eligible to buy a new build home for 30% to 50% less than its market value with the Government’s First Home Scheme. You must meet the following criteria:
- Be 18 or older.
- Be a first time buyer.
- Be able to get a mortgage for at least half of the price of the home.
- Not earning more than £80,000 a year before tax.
-
As a first time buyer, the best scheme for you will depend on your circumstances. For example, if you’re being gifted a deposit from your parents, Parent Power could be an ideal option. Research thoroughly and consider your circumstances carefully before making a decision.
-
It depends on the price of the property you wish to buy and your mortgage lender, but your £15,000 deposit could be a 5% deposit for a home worth £300,000. As this is a smaller deposit payment, be aware that interest rates may be higher.
-
The minimum salary you need to buy a house in the UK varies based on location and mortgage terms. Lenders typically require income 3 to 4.5 times the mortgage amount. In London, a salary of £50,000 plus may be needed for a modest home. However, there are government schemes that may help lower your income requirements.Ready to become a homeowner? Explore our range of brand-new homes across the UK, with fantastic offers to help you move.
Our Offers to Help Get You Moving
Help to Sell
If you’re looking to start your next adventure, but are worried about the hassle of moving, we have a range of schemes available to help you sell your existing home.
Part Exchange
We could be your guaranteed buyer, so no stress or fuss, just an easy move for you and your family.
Armed Forces Deposit Contribution
We're offering Britain's military servicemen and women a 5% deposit contribution to help them buy a brand-new home.
Own New - Rate Reducer
Own New - Rate Reducer is a brand-new scheme available on new build homes that could mean lower mortgage rates and reduced monthly payments.
Key Worker Deposit Contribution
As a thank you for the support provided to our communities, we are offering key workers a contribution of £1,000 for every £20,000 up to £15,000.
Help to Buy Wales
Whether you're a first time buyer or existing homeowner, you could buy a brand-new home in Wales with just a 5% deposit.
Low Deposit Offers
If you have a low deposit, we have a variety of schemes available to help make moving more affordable.
Parent Power
If you’re getting financial support from your family or friends to help you get on the property ladder, we could match it, up to a maximum of 5% of the purchase price.
