A Concise Guide To Preparing To Buy A First Home

Buying your first home is one of the most exciting and biggest decisions you will make in your life. It’s a complex and lengthy process that can feel extremely daunting even to those who have done it before.

Though it may seem completely impossible to get on the property ladder – especially with the cost of house prices continually rising, and an ever-changing mortgage market – our brief guide here is a good place to start.

You can download a free comprehensive guide to buying a new home in England and Wales here.

You can download a free comprehensive guide to buying a new home in Scotland here.

Location, location, location

Location is by far the biggest influence on the cost of a house. On a broad scale, some parts of the country are simply vastly more expensive than others. Recent figures from building society Halifax names Kingston-upon-Hull as the most affordable area for first-time buyers in the UK, with average property prices 23% less than the national average. However, most of us choose a place to live based on where we work, where our families live or aspects such as lifestyle and connectivity.

For the new homes market, WhatHouse.com recently launched our Location Ratings feature, which assesses every development for a wide range of topics. We analyse figures from well-respected organisations and calculate scores for things like Health and Wellbeing, Transport Links, and Education & Amenities, among others. It’s a really useful way of finding out if a brand new development is in the right location for you.

Save a deposit

The vast majority of homebuyers have to make a downpayment on the purchase of their new home, typically 10% of the price but for a first step on the property ladder, it could be higher than that.

It may mean a radical overhaul of your monthly spending habits, and you’ll have to take a hard look at whether sacrificing a social life, holidays and retail therapy in order to put more money aside are things you are prepared to do for what could be a long period of time.

Take a regular look at the best savings accounts to maximise the return you get, and consider things like ISAs which can also provide a tax benefit to add to the pot.

The profession guidance of an independent financial adviser may well be worth the fee to get the best deal out there.

Homebuying schemes

There are a number of ways of buying a new home which can be more affordable than a straightforward open market purchase. Each has its own eligibility criteria.

Shared Ownership

Many housing associations and private developers are offering government-backed Shared Ownership, a way to buy a portion of a property and pay a subsidised rent on the remainder. In many cases, you can start with purchasing as little as 25%, which would need a fraction of the deposit you’d need if buying outright. And over time, if you wish to and can afford to, you can buy further shares until you own 100% of the home. There are separate schemes such as Home Reach which also offer a way to ‘part buy-part rent’.

Deposit Unlock

This scheme is run by the Home Builders Federation (HBF) and it requires a deposit of just 5% of the price of the new property. The HBF represents many large and small housebuilders across the country which offer a whole range of new homes to suit young professionals and families.

First Homes

This is another government-backed initiative. You pay a discounted price for your home, for example 70% of the full price, and enjoy the benefits of 100% ownership. When you come to sell, you’ll receive the same percentage of the sales price, passing the benefit of the First Homes scheme to the next buyer. A number of housebuilders run their own Discounted Market Price schemes too.

Check your credit score

One of the best ways you can prepare as a first-time buyer is to improve your credit score in advance. Having a strong credit score can not only affect whether your mortgage application will be successful but it can also affect your monthly repayments as well.

Applying for a credit card is a great way to build up credit rating. Even a few months of repaying the balance in full will see noticeable improvements to your score.

In the same vein, reducing any unsecured or outstanding credit you have is vital before applying for a mortgage, as you may be unsuccessful in securing a mortgage agreement if you have substantial debts.

Research the added costs of buying and owning a home

At first glance, saving up for a deposit may seem like the only thing you need to do before getting on the property ladder. Unfortunately, this can be just the tip of the iceberg when it comes to the costs of buying your first home and they will all need to be factored into your decision.

Broadly, here are the major extra costs you’ll need to be aware of: mortgage fees, valuation fees, surveys, conveyancing fees and removals. Budget for any service charges you’ll have to pay monthly or annually, and check which council tax band you’ll be in.

Some new home prices are given without including flooring or garden turf, but you may be able to do a deal on that. You may also want to budget for new furniture and fittings, such as curtains and blinds. Don’t forget your buildings/content insurance,

Ensure that you do further research into these additional costs, as they can quickly add up throughout the lengthy process of purchasing your first home.

You can download a free comprehensive guide to buying a new home in England and Wales here.

You can download a free comprehensive guide to buying a new home in Scotland here.