First-time home buyer guide
If you’re a first-time buyer and you’re wondering what you need to buy a house or a flat, you’ve come to the right place. This guide will take you through the process of buying your first home, including getting your deposit together, and sorting out the mortgage application process.
- How much deposit do I need to buy a house?
- Make sure you can afford your monthly repayments
- Budget for the other costs of buying a home
- Affordable schemes to get on the property ladder
- Finding a mortgage
- Freehold or leasehold
- The application process
- Someone else can guarantee your mortgage
- Next steps
How much deposit do I need to buy a house?
Before starting to look at properties, you need to start saving 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.
Make sure you can afford your monthly repayments
Use our Mortgage affordability calculator to work out what mortgage you can afford.
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 that you can afford the mortgage and also ‘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 will need to show the lender evidence of any outgoings and prove your income.
Budget for the other costs of buying a home
Use our Stamp Duty Calculator to work out the Stamp Duty on the property you’re buying.
Apart from your monthly mortgage payments, there are other costs associated with buying a home. These include:
- Mortgage arrangement and valuation fees
- Stamp Duty (or Land and Buildings Transaction Tax in Scotland)
- Solicitor’s fee
- Survey cost
- Removal costs
- Initial furnishing and decorating costs
- Buildings insurance
Affordable home buyer schemes to get you on to the property ladder
There are a number of government-backed schemes aimed at giving home buyers – and movers too – a helping hand onto the property ladder.
If you are able to use one of these schemes, lenders will still ensure that you can afford to pay your mortgage.
- Affordable housing schemes.
- Help to Buy scheme: everything you need to know.
- Shared ownership schemes.
Finding a mortgage
Use the Mortgage calculator to calculate your payments.
There are many different mortgage deals to pick from, so choosing the right one for you can be tricky. It can depend on a number of factors, so it’s a good idea to do some research and talk to experts such as mortgage brokers.
- Understand different types of mortgages.
- Mortgages – a beginner’s guide.
- Having the right mortgage advice.
Freehold or leasehold
If you’re looking to buy a house it’s likely you’ll be buying the freehold, meaning that you own the property and land it sits on. If you’re buying a flat, you will either be buying leasehold, or buying into a share of the freehold.
The application process
Use our Mortgage Affordability calculator to work out how much you can afford to borrow.
Whichever mortgage you apply for, your lender will want to know that you can continue to make your repayments even if interest rates were to rise, or as a result of any planned events that would impact your financial circumstances.
You will need to provide evidence of your income, and provide information on your outgoings, including debts, household bills and other costs, such as clothing, childcare and travel.
To prove your income, you may have to produce payslips and bank statements. If you are self-employed you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.
Someone else can guarantee your mortgage
If you’re struggling to get a mortgage to buy your first home you might want to consider a guarantor mortgage. This means that a parent, guardian or close relative agrees to be responsible for the mortgage payments should you be unable to meet them.
Guarantor mortgages shouldn’t be entered into lightly as they are legally binding arrangements and your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.
You’ll need to talk to a mortgage broker to find out more about which lenders offer guarantor mortgages.