Top tips for first time buyers

Last Modified 16th of February 2021

Purchasing your first property is an exciting time, however it can also be quite financially daunting. The world of mortgages, legal fees and deposits is often confusing for first time buyers, which is why we’ve put together a few of our top tips for first time buyers…

Set yourself a budget – and stick to it!

Before you even start looking at houses or flats, sit down and work out how much you can realistically afford to pay towards a property each month. This will help you to work out how big a mortgage you can afford and therefore calculate the top range of your house price budget.

Don’t forget to factor in all the bills you’ll need to pay each month – including council tax and any ground rent or service charges. You don’t want to overstretch yourself financially and end up going into debt just to keep up with your mortgage repayments.

Get a mortgage in principle

It’s all well and good having a theoretical mortgage, but you’ll need something more concrete if you want to make an offer on the house. If you’ve never had a mortgage before then you can get what’s known as a mortgage in principle, where a lender agrees that you will be able to borrow a certain amount to contribute towards a house purchase.

As it’s the first time you’ve ever taken out a mortgage it’s worth seeking some independent financial advice on the best type of mortgage available to you. Most organisations advise property newcomers to opt for a fixed rate mortgage, as this will guarantee your payments will stay the same for a fixed period of 2-5 years, helping you budget accordingly.

Speak to some homeowners

Your parents and other close relatives are a great source of information if they own their own homes. Chances are they’ll have bought more than one property in their lifetime, so they’re a great source of advice on mortgage options and the house buying process. Just remember not to take everything as gospel – at the end of the day it’s your decision!

Get saving

Whilst you’re looking for a property, tighten your monthly budget and put any spare cash in a savings fund towards your house or flat deposit. The more you can put down up front, the lower your mortgage needs to be, which will save you money in the long term.

All mortgage providers will insist on some form of deposit; they won’t lend you the full amount to finance your property. This is because house prices can go down as well as up, so lending you the whole sum could result in negative equity, which means the amount you owe your bank or building society is greater than the value of your home. Be aware that the deposit required is often higher for first time buyers.

Don’t be afraid to haggle

So you’ve got to the point where you’ve calculated a budget, arranged a mortgage in principle and found a property that’s caught your imagination. Now you need to put in an offer: don’t be afraid to make a low bid initially. As I’m sure you’re aware, negotiations are standard procedure in property sales and most sellers are prepared to accept a sum that is lower than the asking price of the house. It’s a buyer’s market at the moment so make the most of it!

If there is a ‘bidding war’ – where more than one person has put in an offer on your property – or the seller will not negotiate on price, be careful not to get caught up in the moment and offer more than you can afford. If you win then you’ll have to find that money from somewhere.

Other costs

The final thing to remember is that it’s not just the house itself that will cost you money. Properties that sell for more than £125,001 will be liable to stamp duty, whilst you will also have solicitor’s fees to pay once legal documentations have been drawn up for the sale of your house.

Some mortgage providers may also charge you an arrangement fee for setting up your credit agreement, plus there will be one-off fees for necessary procedures such as surveys and a payment must be made to the Land Registry for transferring details of ownership.

Don’t forget to factor in costs such as removal companies or van hire either if you have a lot of furniture that you’ll need transporting to your new home.