Looking to buy your first home? Make sure you have the knowledge and information you need to make the process as stress-free as possible with our top tips…

Plan ahead and know how to prepare your finances and paperwork and you will increase your chances of getting on the property ladder. These expert tips will help…

Start saving

Try to save for a deposit of at least 15-20 per cent of the anticipated price of the property. The greater your deposit, the more likely you are to get access to the most competitive interest rates. Unfortunately, you will need a more sizeable deposit than you might have anticipated too – many lenders have recently withdrawn their 90 per cent loan to value mortgage products, which means that you may need to find more than ten per cent of the value of the property. There are some lenders who will offer up to 90 per cent of the value of the property but these are very few and far between at the time of writing. The sooner you start saving the better.  

Know where you stand financially

Before you start speaking to a broker or lender, it’s important to have a clear idea of your income and outgoings each month. A lender will need to know what your earnings are, and you will need to have a year’s worth of bank statements and three months’ worth of salary slips. If you are self-employed, a lender will normally ask to see bank statements and an SA302 form which shows your income for each tax year.

They may also ask for your accounts and further information from your accountant. Typically, banks and building societies will offer between three and four-and-a-half times your total annual income or total joint annual income if you are buying with someone else. Certain professions may entitle you to borrow more – if you are a newly qualified doctor or dentist, some lenders may offer up to five-and-half times your annual income, while others may allow you to borrow up to six times your annual income if you are an accountant, barrister, engineer, optometrist, pharmacist, solicitor or vet.

Try to clear your debts

Try to pay off or clear any loans or credit card balances. This not only demonstrates that you are reliable when it comes to paying back loans but also shows that you are able to manage your money well and take responsibility for any sums you have borrowed.

Improve your credit score

A prospective lender will look at your credit history and see if you have been able to manage loans and other types of credit in the past. Always repay loans on time so that you have a good reputation as a reliable borrower. If you don’t have a credit card, it may be in your best interests to get one, use it for a while and pay off the balance in full each month. Again, this shows that you can manage your money and builds up a healthy credit history which will stand you in good stead when applying for a mortgage. If you don’t know what your credit rating is, you can check it free of charge at Experian.


Get onto the electoral register

Not being on it can affect your credit score and being on the electoral roll can also help you to verify your identify which is essential when applying for a mortgage. You can register here. To register you must be a British citizen or an Irish or EU citizen living in the UK. It only takes about five minutes to register and you will need your national insurance number.


Talk to a broker

A broker has access to a wide range of competitive mortgage products and will be able to find the best mortgage offer to suit your needs. They will also be up to date with what is going on in the market which means they can save you a lot of time trawling around if you were to do the mortgage search for yourself. They will deal with your lender directly and save you having to get in touch via call centres, which can be time consuming.

Factor in other costs of buying a property

It’s not just the cost of the deposit you need to think about when you start saving to buy a house, there are other costs you need to factor into your budget. These include the cost of a survey on the property you have in mind (fees vary), a home buyer’s report, solicitors’ fees (around £900-1500), and possibly a mortgage arrangement fee (again, the fee varies). Not all lenders will charge an arrangement fee, but some will and it’s important to find out early on if this is the case so that you are prepared. When you do move into your new home, there will also be the cost of buildings and contents insurance to consider.

Understand Stamp Duty

You may be wondering whether or not you need to pay Stamp Duty Land Tax, known simply as Stamp Duty. A person who is not a first-time buyer would need to pay stamp duty in England and Northern Ireland when paying more than £125,000 for a residential property. They wouldn’t pay stamp duty on the first £125,000 of the property but would pay two per cent on between 125,001 to 250,000 and five per cent on between 250,001 to £925,000.  

However, first time won’t pay any Stamp Duty on a property worth up to £300,000. This will save you £5000 on a property of that price. If you buy a property that costs up to £500,000, you will not have to pay stamp duty on the first £300,000 – only on the remaining £200,000. If however, the property is worth more than £500,000, you won’t qualify for Stamp Duty relief and will pay the standard rates of Stamp Duty, essentially following the rules for people who have bought a home before. It’s important to note that if you are buying a property with someone else, you will both need to be first-time buyers in order to obtain First Time Buyer’s Stamp Duty relief.

Be confident you can afford your monthly repayments

While your main focus right now may be on being able to get a mortgage, check that the mortgage deal you are going to take will genuinely be affordable for you. A good broker should always act in your best interests but it’s down to you to ensure you can afford the payments each month.


Check to see if you qualify for government help

If you are seeking to buy a new build house, you may be able to get a Help to Buy equity loan from the government. This is a low-cost loan on properties with a purchase price of up to £600,000 in England or £300,000 in Wales. With an equity loan you will only need a five per cent deposit and the government could lend you up to 20 per cent or 40 per cent of the property price in London. You must be purchasing a home from a registered Help to Buy Builder. Read more about the government’s Help to Buy Equity Loan Scheme.

Consider what type of mortgage would best suit you

There are different types of mortgages and a good broker will recommend one to suit your personal situation. These include:

Fixed rate mortgages – the interest rate stays the same for a fixed period of time, such as two years, five years or even ten years, regardless of whether interest rates in the market go up or down. This can offer peace of mind when it comes to managing your money. You’ll know exactly what you will pay each month and can budget accordingly. However, if interest rates go down, you will still pay the same amount each month. That said, interest rates are currently very low so this may be unlikely for the foreseeable future. It’s also important to stress that fixed rate mortgages are usually at a higher rate than variable mortgages

Variable rate mortgages – this is less secure, as the interest rate can change in line with rates going up or down, so you may benefit if interest rates go down, but you may also end up paying more money if rates go up. There are different types of variable rate mortgages so it’s a good idea to discuss your options with a reputable broker and if you go down the route of a variable rate mortgage, be confident that you have a contingency in place for interest rates going up and you having to pay more each month.

Be realistic and wait a bit longer if you have to

If you’re not sure about your current work situation and fear that it may change soon, or if you aren’t sure you can afford the monthly repayments, hold back a bit longer and keep saving. Don’t rush into getting a mortgage and put yourself under unnecessary pressure. Interest rates are currently low and there are some very competitive mortgage products on the market. This is likely to remain the case for the foreseeable future due to the Bank of England’s base rate (the interest rate it charges for lending to other banks) at an all-time low of 0.1 per cent. It’s currently cheap to borrow and while there are no guarantees, this isn’t likely to change overnight.

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