First Time Buyer Advice

First Time Buyer Advice

Home ownership is a major ambition for most Britons. But it is a significant financial commitment and the home buying process is often considered akin to crossing a treacherous sea.

Zoopla's first-time buyer advice includes actionable tips on how to make that crossing smoothly.

    • Save for a deposit
    • Buy with someone else
    • Secure a mortgage
    • Don’t forget other buying costs
    • Get ahead of the crowd
    • Make the most of viewings
    • Explore the neighbourhood
    • Look out for development in the area

Questions first-time buyers should ask themselves

Before you start the search for your first property, consider the prospect of buying and owning a home from all angles.

  • Why do you want to buy a property? Are you emotionally and financially ready?
  • Do you have a stable job that will support the financial commitment of buying and owning a home?
  • How much can you afford to buy?
  • What are the upfront costs of buying a home?
  • What are the ongoing maintenance costs? If a window breaks or the roof needs replacing, will you have enough money to cover the repair work?
  • Should you buy now or would it be better to save a larger deposit?
  • What mortgages can you reasonably apply and qualify for?
  • What incentives are on offer for first-time buyers?
  • Where do you want to live?
  • What do you want in a neighbourhood?
  • What type of property do you want to buy? New or re-sale? 
  • Are you happy to remain a homeowner for the next few years?
  • Will buying a home fit your long-term plans?

Save for a deposit

Raising a deposit is a major part of the journey to home ownership. Here are some tips on how to save the cash.

Establish how much money you need to set aside for a deposit. The bigger your deposit, the more competitively-priced your mortgage is likely to be.

It’s advisable to start saving as much as possible, as soon as possible. First-time buyers today need to save for a bigger deposit to secure a mortgage deal, according to recent findings by estate agents Your Move and Reeds Rain. It is typically £25,134, which is 4.2 per cent higher than a year ago.

One option is to lock in money over a short period of time in a regular savings account. You can secure competitive interest rates in exchange for not dipping into your cash. Some banks and building societies may require you to open a current account with them first.

Alternatively, you could try a more flexible account. An easy access account for example, allows you to pay in and withdraw money at any point. They tend not to offer such a high rate of interest.

If you are looking for a longer term option for keeping your savings, then you may want to consider a cash or stocks and shares Individual Savings Account. You can put your savings into one cash ISA and one stocks and shares ISA each tax year. ISAs are tax-free and you can pay in up to £15,240 of savings in the 2015 to 2016 tax year. There are a range of ISAs available, with variable and fixed rates of interest.

The Government’s Help to Buy ISA will allow you £50 for every £200 saved for a deposit from this autumn. Each bank or building society offering the product will have their own interest rate. Help to Buy ISA will be limited to £3,000 on £12,000 of savings.

Another option is a fixed rate bond, which pays a set amount of interest over a particular time scale. It is unlikely that you will be able to dip into your savings during the term.

Share the financial burden and buy with someone else

If the prospect of buying a new home on your own is daunting and financially tough, then you may want to consider teaming together with someone else.

If you buy your first home jointly with a friend or family member, you can top up the size of your deposit and therefore access a wider spread of mortgages.

You may be able to boost your appeal as a purchaser if the friend or family member you are buying with has a good credit rating and larger income than you.

Whether it’s your mum and dad, boyfriend, girlfriend or friend, it’s important to discuss freely and clearly your commitment to buying a property together.

Optimise your chances of securing a mortgage

Most first-time buyers will need a mortgage - otherwise known as a loan - to purchase a home. Follow Zoopla's tips to improve your chances of agreeing a deal.

  • Make sure you have all your finances and paperwork in good order. Post-credit crisis, lenders have strict conditions attached to mortgages. They will want to know that you will be able to meet all your mortgage repayments – even when your circumstances change. Lenders will likely want to see evidence, such as proof of income and regular outgoings including household bills. This is particularly important if you are self-employed.
  • Clear your debts to show that you can manage your money. Lenders will look more favourably on you if you don’t have any outstanding loans.
  • Lenders like to see that you are in long-term employment. If you are in a probationary period at work, it’s worth checking whether the lender will agree a mortgage before it ends.
  • Smooth the way by getting a copy of your credit report to see how you can improve your credit rating. Reports are held by credit reference agencies such as Experian, CallCredit and Equifax and show what lenders will see when they examine your mortgage application.   
  • You may want to consider securing a mortgage in principle from your proposed lender. It outlines how much you are able to borrow within a specified timescale. A mortgage in principle is not a guarantee of a mortgage. However, it can reassure estate agents and sellers that you are serious about buying a home and that you have the finances in place to back up your offer.
  • Try not to chop and change the details listed in your mortgage application. The more you amend the information and figures, the more you will hold up the buying process.

Don’t forget those other buying costs

There are several different costs associated with buying your first home so remember to build them into your budget. Don’t forget:

  • The lender might charge you for reserving your mortgage as the offer is drawn up, for arranging your mortgage and for assessing the value of the property you plan to buy.
  • You may find that cheap mortgages are offset by expensive fees and costs from lenders.
  • You will almost certainly want to hire a chartered surveyor to carry out a study of the property you intend to buy and make sure that there are no major faults or issues. You may consider it an extra expense you can bypass, but remember it may well save you money further down the line.
  • It is highly recommended you appoint a solicitor to deal with the legal aspect of buying a property. This is known as conveyancing.
  • Stamp Duty Land Tax, paid on property transacted over a particular threshold, is a major cost and varies depending on the value of your property.
  • Moving costs, such as the hiring of a removal firm. 
  • Redecoration and furnishing costs.

Get ahead of the crowd

There can be many buyers at any one time looking for similar properties and areas to you.

It can be helpful to build up a rapport with estate agents and stay in regular contact with them, so that when your dream home comes onto the market, you are among the first to pounce on the opportunity.

Sign up for property alerts on property portals, such Zoopla, so that you are the first to hear about new homes for sale.

Make the most of viewings

Not much beats seeing a property with your own eyes. Studying photographs, computer generated images (CGIs) and floor plans all help, but don't underestimate the importance of visiting a property yourself and talking with the sellers.

  • It's advisable to go on viewings as soon as possible. If you leave it too long after a property has been put on the market, other potential buyers might steal a march on you and you could lose out. 
  • You should try and keep a business-like attitude to buying a home. Remember to ask the important questions rather than get carried away with ideas of how you could decorate it.
  • Consider visiting at different times of the day and night to get a comprehensive view of the property and area you're interested in.
  • Take your own photos of the property – they’ll be handy to refer to later on.

Sellers are not going to volunteer information about the more negative aspects to their home. So you will have to do your own investigative work. Here are some questions worth asking as you look at properties:

  • Why is the seller putting the home on the market?
  • How long has the property been available for?
  • How many viewings has the home had?
  • Have any offers been made on the property? And if so, at what level and who by?
  • Has the seller got an alternative property secured to move into?
  • What is included in the sale?
  • Have any renovations been done on the property? And if so, what?
  • Have there been any subsidence problems? And if so, what?
  • How long has the seller lived there?
  • What is the council tax on the property?

And here is what to look out for while you are being shown properties:

  • Keep an eye out for damp patches: mold, peeling wallpaper and musty smells.
  • Check for any cracks, stains or drips.
  • Study doors, cupboards, drawers and windows to make sure they all work.
  • Take a note of the wiring and flick switches.
  • Test the plumbing: check the toilets and taps, cupboards underneath sinks, water pressure, and drain flows.
  • Check the central heating, including the boiler and radiators.
  • Make sure door and window locks are in line with insurance standards.
  • Lift mats, rugs and carpets to see what is underneath.
  • Watch out for mobile black spots.
  • Inspect the attic for any rot, cracks or holes in the timber.
  • Look out for cracks, mold and rot in the outside walls, slipped tiles on the roof and gutter leaks.
  • Determine where the sun rises and sets.

Explore the neighbourhood

Location, location, location. When on viewings, you should consider the neighbourhood, including the local amenities. You might want to check out:

  • Neighbours: knock on their door and chat with them. Find out what it is like to live in the area – you will also get a feel for whether they would be compatible as neighbours.
  • Travel and transport.
  • Schools and other public services.
  • Restaurants, bars, cafes and shops.
  • Parks and recreation.
  • Entertainment.
  • Community, crime and safety.
  • Speak with the local policeman, shopkeeper or Neighbourhood Watch coordinator to get a better understanding of the area.

Look out for development in the area

Find out from the local council if there are any major projects planned for the area - they could boost house prices. Big-name developers moving into the area is a sign that it is improving.

  • The opening of shiny new property developments, schools, well-known branded shops and restaurants, and transport links can help to bolster the appeal of neighbourhoods and in turn, house prices.
  • Recent research by Lloyds Bank showed that living close to a supermarket can boost house prices by £15,000. Buyers are prepared to pay most to be close to a branch of Waitrose, at an average of 12 per cent of £38,831.

Some information contained herein may have changed since it was first published. We strongly advise that you to seek current legal and/or financial advice from a qualified professional.

(Source: Zoopla, 2016)