The Ultimate Guide to Buying Your First Home in the UK

Purchasing your first home can feel daunting and exciting in equal measure. It’s important to take your first step on the property ladder confidently and find the right home — at the right price — for you.

This guide will show you:

• How to get started on the property ladder
• The options for financing your first home
• House-hunting tips for beginners
• How to navigate the legal and administrative side of property buying
• Tips and tricks for moving and getting settled into your first home.

Getting Started

So you’re ready to get on the property ladder? Congratulations! This is a real milestone moment, so make sure you get it right.

Understand Your Budget

Unless you have the full amount available in cash, the budget for buying your first property will be made up of two key areas: your deposit and your mortgage. 

Your deposit is the amount of money you already have. This may be made up of your personal savings, a gift or inheritance from your family, or some kind of lump-sum payout. 

Your mortgage is the amount the bank, or other lender, is willing to offer you as a loan, typically repaid over a number of decades, with interest. This may be based partially on the amount you have available as a deposit, and partially on an analysis of your household income and expenses, to discover what would be affordable for your monthly repayment. 

You will also have to take additional costs into account, such as legal fees.

Set Your Priorities

For first-time buyers, it can take some consideration — including viewing a number of properties — to identify must-have features and preferences. 

Consider which features are absolutely essential, and which can be added later. If you are making the purchase as a couple, it is important to discuss priorities and preferences ahead of time so that you can start out on the same page.

Choose the Right Location

It’s all about location, location, location, isn’t it? As well as looking at ties you have to a particular area (such as friends or family living nearby), consider your commute time, nearby amenities (such as public transport, shops, green space, and school catchment areas), and the future prospects of the area.

Financing Your Home

Most first-time buyers will finance their home by borrowing money through a mortgage, alongside a cash deposit. 

Mortgage Options for first-time buyers

First-time buyers have a plethora of mortgage types and rates available to them. This post covers mortgage types in more detail, but the mortgage types available to first-time buyers include:

• Fixed-rate mortgages: Give you stability and protection from rate rises, but can have higher initial interest rates than other mortgage types, and lack flexibility
• Variable-rate mortgages: Tend to come with lower initial interest rates than other mortgage types, with the flexibility to repay early, but come with a risk of payment fluctuations and higher interest rates
• Tracker mortgages: Directly linked to the Bank of England’s base rate, with the potential for lower interest rates (and repayments) when the base rate decreases, but also the risk of higher interest rates (and repayments) when the base rate increases

Most first-time buyers and owner-occupiers take out repayment mortgages, to build equity in the property, and eventually own the home outright. In interest-only mortgages, the mortgage-holder only pays interest on the loan amount, making monthly payments lower than a repayment mortgage, but having no plan to pay off the capital loan without selling the property. Interest-only mortgages are typically reserved for investment opportunities — not first-time homebuyers.

Mortgage Pre-Approval Process for first-time buyers

Mortgage pre-approval, or a mortgage in principle, is a way to secure a mortgage from a lender, up to a specified amount within a given timeframe (normally 60-90 days), based on information you have provided. 

This means that you can understand your budget and shows potential sellers that you are a serious buyer.

To secure a mortgage in principle, your independent mortgage advisor or mortgage broker will assess your financial and personal information, such as your income, outgoings, and proof of deposit.

Government Schemes and Assistance for first-time buyers

First-time buyers have a number of schemes and assistance available to help them get onto the property ladder, including:

• First Homes scheme: 30-50% off market value. 

Available to first-time buyers in England purchasing specific homes as part of the scheme. Buyers must be able to get a mortgage for at least half the price of the home and earn less than £80,000 a year. More information on the First Homes scheme.

• Shared Ownership: Buy a 10-75% share of market value and pay rent on the rest

It is available to first-time buyers (and some others) with a household income of less than £80,000 a year, who cannot afford all of the deposit and mortgage payments for a home that meets their needs. The property must be either a new-build home or an existing home through a shared ownership resale scheme. 

There is also potential to buy more shares in the property over time, with the goal of owning the property outright. More information about the Shared Ownership scheme.

House-Hunting Tips

Finding the right property at the right price in the right location can be a challenge. This is when engaging the expertise of your local estate agent can really help.  

Research Properties

With your budget in one hand and your priority list in the other, it is time to start looking for a suitable property. 

As well as searching the online platforms, working with your local estate agents can be a great way to find your first home.

View Properties

Once you have a shortlist of suitable properties, it’s time to view them. Take your time and look around at both the interior and exterior of the property, as well as the wider area. 

First-time buyers in particular may want to bring along a trusted friend, partner or family member (preferably one who has gone through the homebuying process before) for a second opinion.

Here is a helpful checklist of what to ask and look for during property viewings.

Make an Offer

Understand the local market trends and comparative property prices before going in with an offer. 

Offer too high and you risk paying over the odds but offer too low and you may put the sellers off altogether and lose out to another buyer. 

Make sure you are responsive to your estate agents when it comes time to negotiate — offers can be accepted or counter-offered quickly.

Legal and Administrative Process

There can be a lot of paperwork and admin involved in buying a property. First-time buyers in particular may not be familiar with the legal process and terminology of homebuying.

Conveyancing Process Explained

Conveyancing is the legal term for the transfer of ownership of a property.

Your conveyancing solicitor works on your behalf to protect your interests and ensure the purchase runs smoothly. 

They will conduct searches and draw up contracts concerning your property.

Understanding Stamp Duty

Stamp duty is the tax you pay on a property purchase. 

If you buy a property for less than the threshold, which is currently £425,000 for first-time buyers buying a residential property worth £625,000 or less, there’s no stamp duty to pay.

Completing the Purchase

Finally, your solicitor will work with you, your mortgage lender, and the seller of your property, to finalise and complete the sale, including the exchange of contracts

Moving In and Settling Down

By now, the hard part will be over. It is time to pack up your boxes and make your new house a home, by setting up utilities, inspecting the property on move-in, decorating and buying furniture (or asking older family members if they have any old furniture cluttering up their home!), exploring the local area, introducing yourself to the neighbours — and planning that housewarming party.

Conclusion

First-time buyers can feel like they’re entering a whole new world of terminology and administration. Hopefully, this guide has demystified some of that and will help you buy your first home in the UK. 

Ready to get started? Contact Home and Manor to embark on your home buying journey today.