Buying your first home explained

As exciting as the prospect of becoming a homeowner is, there are a lot of things to consider, not least of all getting a mortgage in place so you can buy your dream home. That’s why we’ve created a guide to help first-time buyers get onto the property ladder.

As exciting as the prospect of becoming a homeowner is, there are a lot of things to consider, not least of all getting a mortgage in place so you can buy your dream home. That’s why we’ve created a guide to help first-time buyers get onto the property ladder.

Mark Gordon
From the Mortgages team
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Posted 22 JULY 2020

Please note: The information in this article was correct at the time of publication on 22 July 2020 but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with GOV.UK to confirm any details. 

What are the costs involved with buying your first home?

We all know that buying a house is one of the biggest purchases you’re ever going to make. But you might not be clued up on all the additional costs involved in buying a new home, which can add up to 10% of the house price. Here’s a quick run-down of what these extra costs might be.

Upfront costs

  • Stamp duty is a tax on transactions that involve property or land. It’s payable on property purchases in England and Northern Ireland. Scotland and Wales have their own systems. The amount of stamp duty you pay increases with the value of your purchase. Stamp duty is normally payable on property purchases over £125,000, with first-time buyers exempt for purchases up to £300,000. But in response to the COVID-19 pandemic the Government has temporarily cut stamp duty on homes bought from 8 July 2020 until 31 March 2021. During this time, it’ll only need to be paid on the cost of a property above £500,000.
  • You can find out exactly how much stamp duty you’ll have to pay on the GOV.UK website.
  • Home survey costs. You’ll need to get the house checked to make sure it’s structurally sound before you take the plunge and buy it (see below for more details).

Mortgage fees

  • A valuation fee (not all mortgage providers charge for this), costing between £150 and £1,500, based on the value of your new home.
  • A mortgage arrangement fee (not all mortgage providers charge for this), which can be anything up to £2,000.
  • If you feel you need help choosing your mortgage and decide to use a broker, be aware that they could charge up to £1,000 (although the average is £500).

Legal fees

You’ll need a solicitor to help you purchase your first home (see below for more details).

Other costs

  • Professional movers, unless you know someone with a van who can help you move.   
  • Buying appliances and furniture for your new home.
  • Your new property may need work or a general spruce up, so remember to account for any DIY you might want to do.
  • You might need to pay to get connected to a broadband provider. For more information, check out our guide to comparing broadband packages.

The list above is certainly not exhaustive. Some first-time home buyers will face all of the costs listed above, while others will only face a few. It’s a good idea to keep these costs in mind throughout the whole buying process and have a contingency fund in place to cover them.

What type of home survey should you choose?

A home survey will give you expert advice on the condition of a property. You can choose from three levels of survey, and it’s best to choose a survey based on the condition of the property you want to buy, rather than the price of the survey.

RICS Home Condition Report (HCR) This uses simple ‘traffic light’ ratings on key areas of the property. It’s best suited to conventional properties and newer homes, and costs around £250.

RICS HomeBuyer Report (HBR) This is most suitable for conventional properties that are in a reasonable condition. You can opt for a survey only, which includes all the features of the HCR but will help you find out if there are any structural problems, or a survey and valuation that also advises on problems that could affect the value of the property. An HBR costs from £400, on average.

RICS Building Survey This is a particularly good idea if you’re buying an older house or one that needs repairs. It’s the most comprehensive survey available and provides detailed advice on repairs, although it doesn’t usually include a valuation. Starts at around £600.

What legal fees are applied when buying your first home?

When you’re buying your first home, you’ll need a solicitor or licensed conveyor to handle all the legal aspects. This involves drawing up contracts, registering the property with HM Land Registry and organising the payment of stamp duty. The legal fees can vary but, typically, they’ll be between £850 and £1,500 (including VAT).

Your solicitor or conveyor will also do local searches to check whether there are any problems with the property you intend to buy and the area around it, and to see if there are plans for any nearby developments. The average costs for these searches is £250 to £350.

What should you look out for when buying your first home?

Purchasing a house is a big deal, especially when you’re a first-time buyer. In fact, in October 2020, the average price for a first home in England was £218,613.

It’s important to remain level-headed throughout the buying process and to think carefully before making any decisions. Fortunately, we know some of the pitfalls awaiting the first-time buyer and we’re happy to share them with you.

When viewing your potential first home, it’s easy to look at it through rose-tinted glasses and you might fail to spot things that can cause serious problems later on. If you have a family member or friend who’s in the building trade, it may be a good idea to take them along to view the property. They could see issues that you miss, and you can even use these problems as bargaining tools to drive down the price of the house.

Some things to look out for include:

  • Damp and mould
  • Structural issues
  • Faulty wiring and leaking pipes
  • Chipped and cracked plaster
  • Anything that will be expensive to repair

While it’s best practice to ensure that the home you’re buying is safe and doesn’t need hugely expensive repairs, you also need to be realistic. You may need to settle for certain things – poorly laid carpet or ugly wallpaper may not be your first choice, but they’re certainly things you can fix once you’ve settled into your mortgage payments. As long as your basic needs are met and the house is safe, don’t write it off.

Can you buy your first home if you have bad credit?

Poor credit doesn’t necessarily put an end to your dreams of getting onto the property ladder, although there may be certain difficulties to navigate. If your credit rating is poor, your mortgage provider will typically ask for a large deposit. Charges and interest rates may also be higher.

Bad credit mortgages, also known as sub-prime mortgages, do have one advantage though. After continuously paying on time, you should see your credit rating improve. As long as the rest of your finances are in order, you’ll probably be in a position to switch mortgages eventually.

What do you need when applying for a mortgage?

Mortgage providers are lending their customers large quantities of money, over long periods of time. Because of the risk involved in that, they’ll want to understand your credit worthiness and so will ask for details about your income and outgoings, for example, and will check your credit rating.

Before you even contact possible mortgage providers, it might be a good idea to check your credit rating with a credit reporting agency to make sure everything is looking good.

Your mortgage provider will ask to see the following:

  • Payslips from at least the last three months
  • Your P60 form
  • Three to six months of statements from your current accounts
  • Statements from your savings accounts
  • Information regarding any benefits received
  • Two to three years’ worth of accounts, if you’re self-employed
  • Your self-assessment tax return, if you have more than two jobs or are self-employed
  • Recent utility bills
  • Proof of identity

If you compare mortgages with us, we’ll show you all the types of mortgage available, how much your monthly repayments will be and the fees you might have to pay, to help you decide on a mortgage that’s right for you.

Simplifying the process

We’ve published a comprehensive First Time Buyers Guide, which covers everything you need to know before and during the process of buying your first house, to make the process as smooth as possible. And we’ll explain about home insurance, life insurance and setting up your utilities. 

How can you get the best deal on your first-time buyer mortgage?

There’s a lot to think about when it comes to buying your first house, but you can reduce the fuss of finding a mortgage provider by visiting our website and comparing mortgages from some of the most popular providers in the UK.

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