In this guide
The Bank of Mum and Dad is spending records amounts on helping their kids get on the property ladder. But not everyone has that extra financial support, so here we walk you through how to buy your first home, including what government schemes there are to help you afford it.
First-time buyers have faced soaring property prices over the past few years, a hike in mortgage rates and a cost of living crisis.
Without help from family members, many would not be able save enough for a deposit. This year alone, parents, grandparents, siblings and friends are expected to support almost 50% of property purchases this year, according to research from Legal & General.
In this article, we explain:
- Can I afford to buy a home?
- How can I improve my chances of getting a mortgage?
- What are the costs to consider when buying a home?
- How do I make an offer on a house?
- How do I apply for a mortgage?
- What help is there for first-time buyers: a list of government schemes?
Read more: What is a 100% mortgage and can I get one?
Can I afford to buy a home?
The first step is to consider how you are going to afford to buy a property. Average property values are now around 6.7 times the average UK salary and the average deposit needed to buy a home reached almost £62,500, according to Halifax.
Nearly two thirds (63%) of first time purchases are now in joint names, meaning that buying a home as a single person is even more difficult.
While the deposit is likely to be your biggest outlay, there are also plenty of other fees to pay when buying a home. We have more on the hidden costs of buying a house.
Once you have your deposit, a bank or building society will then lend you the rest of the money in the form of a mortgage if they believe that you will be able pay it back over a set number of years.
A typical first-time buyer deposit is around 10% of the property’s value, meaning that they will borrow 90% from the lender.
A free online mortgage calculator will give you a guide of how much lenders may offer you and therefore how much you will need to save for a deposit
Try out Times Money Mentor’s free mortgage comparison tool to discover current deals and the interest rates you might have to pay
If it all seems too expensive, you might need to ask yourself whether buying is the right decision for you now, or if you could compromise on the area you live or the size of the home you want to buy.
How to improve your chances of getting a mortgage
It may feel like a daunting prospect but there are a number of actions that you can take to increase your chances of getting a mortgage:
1. Check your credit score
There isn’t a minimum credit score required for buying a house. However, the higher your credit score is, the better your chances are of being offered a better mortgage deal.
It’s a good idea to check your score (for free) with the three main credit agencies about a year before you plan to buy. The main agencies are Experian, Equifax and TransUnion. We explain how to check these scores for free here.
Understanding your credit rating can help you work out if you need to improve it before applying for a mortgage.
2. Use a mortgage broker
Using an independent mortgage broker can help you to wade through the jungle of available mortgage products. This could be especially useful for the self-employed or those with variable earnings.
We outline the pros and cons of using a mortgage adviser here.
3. Use a government scheme
There is help out there, even if it doesn’t come in the form of the bank of mum and dad.
We outline the support available to first-time buyers later in this guide, such as the lifetime ISA and the mortgage guarantee scheme.
4. Save a big deposit
A substantial deposit can give you access to some of the best mortgage deals and the cheapest mortgage rates.
It is possible to find a mortgage with a deposit of just 5% but these deals tend to have the highest interest rates and have stricter criteria for eligibility.
Times Money Mentor can help you choose a mortgage with this comparison tool.
What are the main costs of buying your first home?
Home-buying does not come cheap. Saving for the deposit is the biggest hurdle for first-time buyers.
You will typically to lay down at least 5% of the property price as a deposit. The average figure was 21%, according to Halifax’s latest data. But there are lots of other costs to consider too.
Before you start viewing properties, it’s a good idea to know what fees you will be expected to pay along the way so you don’t get any nasty surprises.
1. Conveyancing fees
You will normally need a solicitor or conveyancer to help you buy the property.
Expect to pay between £500 and £1,500.
2. Land Registry fee
The Land Registry keeps records of all registered properties in England and Wales. You solicitor might include this fee as part of your conveyancing package but it’s worth checking.
Fees will vary depending on the purchase price to between £90 and £140.
3. Stamp duty
Stamp duty is what everyone has to pay when they buy a home above a certain price or threshold. You pay extra depending on how expensive the property you want to buy is.
This stamp duty calculator will tell you how much to expect to pay. (Scotland and Wales have different rules).
First-time buyers have a higher stamp duty threshold which you can find out about here.
4. Homebuyer survey
A homebuyer survey gives you an idea of the condition of the property. It’s a good idea to get a thorough one done so that you are aware of any issues before you buy. It can also be a useful bargaining tool.
There are different types of surveys, costing between £400 and £1,500.
5. Mortgage fee
Sometimes known as an arrangement fee, this is the cost the lender will charge you for setting up the loan.
This fee is usually between £1,000 and £2,000, though you might be able to add this to the cost of the mortgage.
6. Valuation fees
This is charged by the mortgage lender to check the property is worth roughly what you are planning to pay for it.
You can expect to pay between £160 and £600, depending on the size and type of home.
7. Mortgage broker
You might benefit from using an independent mortgage broker. Nearly all mortgage brokers will earn commission from the lender, but some will charge you a fee on top, usually between £300 and £2,000.
You could benefit from the fee-free advisers so it’s worth considering this option to save yourself some money.
8. Indemnity insurance
Your solicitor can arrange indemnity insurance, which is a one-off payment for a policy that lasts forever. It can cover a problem with the property that could result in council or legal action in future. For example, if your home had a loft conversion but the seller did not have the correct building regulation certificates.
Most cost no more than a few hundred pounds.
9. Electronic transfer fee
Large amounts of money will change hands within a short period of time when you buy a house.
Same-day bank transfers cost around £30.
10. Removal costs
Removal costs depend on what furniture you own and the distance to travel to your new home.
The average removal company costs for a 3-bedroom house travelling 50 miles are £1,181, according to comparemymove.com.
11. Building insurance
Most mortgage lenders require you to get building insurance.
It costs £110 a year on average.
12. Reservation agreement
You might be asked to pay the reservation agreement. The aim is to lock people into the buying process to preventing gazumping. This is when someone makes a higher offer after yours has been accepted.
Both buyer and seller would put down £1,000 and if either side pulls out, they will forfeit their payment. Some reasons for withdrawing may be allowed, such as a bereavement, losing your job or an inability to obtain a mortgage.
We have lots more detail about these fees in what are the hidden costs of buying a house?
What is a mortgage in principle?
A mortgage in principle, sometimes known as an agreement in principle, is a document from a lender which can give you an indication of the maximum amount it would let you borrow based on your income, spending and debts.
You can usually get a mortgage in principle online on lender websites or by going through a mortgage broker. It can be handy to have this document before you start viewing properties so that estate agents know you’re serious about buying.
When getting a mortgage in principle, lenders might need to do what’s known as a “soft search” on your credit file to decide how much to lend.
If you decide to apply for a mortgage, the lender will probably ask you more detailed questions and ask you to send evidence of earnings, deposit and your address to decide how much to let you borrow.
When you apply for a mortgage it will do a “heard search” on your credit file, which could affect your credit score.
What should I look for when buying my first home?
Once you feel confident that you can afford to buy, you should consider what kind of property you want and the area where you want to live in.
Be realistic: there’s no point in dreaming up a three-bed detached house in central London if you won’t be able to afford it.
Look on property portals like Rightmove or Zoopla to get an idea of the properties available and the price.
Make a list of priorities starting with the most important. For example:
- How many bedrooms and bathrooms do you want?
- Do you want to be near local shops and parks?
- Are schools important to you?
Bear in mind that you might have to compromise on some of the things on your wish list.
If you want to buy in an expensive area, you might want to consider a fixer-upper. But remember that you will have to account for the extra costs associated with renovating the house.
While you don’t necessarily need a mortgage in principle to view properties, some estate agents want this document as evidence that you’re a serious buyer.
What questions should I ask when viewing properties?
Don’t be afraid to ask lots of questions. Here are some suggestions:
- How long has it been on the market?
- What renovations have been done?
- How many viewings has it had?
- How many offers has it had?
- How old is the boiler and when was it last inspected?
- Are white goods and curtains included?
Also consider the re-selling potential. It may be your dream home but will others be potentially put off by the walk through the kitchen to get to the bathroom?
Read more about the best ways to add value to your home here.
What are the steps to buying a home?
It can take months from finding your own home to moving into it. We give you a very brief outline of all the steps to buying a home in this section, but you might want to read our step-by-step guide to buying a home.
It’s good to get a rough idea of what’s in store before you start the process of looking for a property.
Before you start viewing properties, you can:
- Think about the kind of property you want and any other requirements
- Compare quotes from conveyancers (this is the solicitor who handles the legal side of your property purchase)
- Decide what type of mortgage you want (here’s a free comparison tool to help you)
- Pick a mortgage adviser (if you want to use one)
- Get a mortgage in principle (the estate agent might want to see this to know that you’re a serious buyer)
Then you can start viewing properties. We recommend seeing a few places before putting an offer in because this gives you a good perspective of what you can get for your money.
How to make an offer on a house
Once you have viewed a few houses and have found one that you really like, you can consider making an offer. But how do you know what kind of offer to make?
Here are some tips:
- Do your research: look at how much similar properties in the same area have recently sold on property websites. You can also look on the Land Registry’s website.
- Unless you’re competing with other buyers, consider going in slightly lower, perhaps 5% below the asking price. If this is rejected you can always go back with a second offer.
- If you are renting and can move quickly, mention this to the estate agent as this can be a useful bargaining tool.
- You could also say that you’re happy to be patient while the owner finds house to buy, which could also be a valuable perk to the seller.
- If it sounds like other potential buyers are also interested in the property, you could make your first offer your best offer. This could encourage the owner to take the property off the market as quick as possible and might help you avoid a drawn-out negotiation process.
- If the bidding process goes to “best and final offers”, this usually means that at least one other buyer has put in an offer too. You should consider the absolute maximum you are willing to pay, but avoid paying more than you think a property is worth.
If your offer is accepted then congratulations! Get the bottle of champagne out, you are one step closer to becoming a homeowner.
You should celebrate the wins but there’s still a long way to go yet before you can call the house your home.
Once you have had an offer accepted:
- Instruct your solicitor to act on your behalf (they might ask you to pay a small deposit upfront)
- You can ask your mortgage broker to help you apply for a mortgage (or go directly to the lender): you will have to provide lots of documents to prove your earnings and outgoings
- Your lender will carry out its own checks on the property (and on you) to make sure it’s happy lending you the money secured against your new home. It might decide you’re paying too much, in which case you might have to stump up a bigger deposit or renegotiate the price with the seller
- Your solicitor will carry out searches on your behalf
- Hire a surveyor to carry out a property survey on the home you want to buy (if there are any glaring issues, you might want to renegotiate with the seller on the price of the property)
- Your mortgage offer is (hopefully) accepted. Make sure everything in your mortgage paperwork is correct.
- You and the owner of the house will decide on a completion date
- At this point you need to send your deposit to your solicitor and sign the contract
- Exchange contracts to finalise the process of climbing the property ladder. This is when the buyer and the seller swap signed contracts. It’s legally binding to exchange contracts: once this is done the chances of anything falling through are slim
- Your solicitor then sends you a completion statement which outlines all the other costs you have to pay
- The next step is signing of the transfer deeds, which needs to be witnessed to acknowledge that you are taking ownership of the property
- Your solicitor will then ask your lender for the mortgage money. This money is sent to the seller’s solicitor and then to their lender. This basically clears the mortgage from their end, meaning the seller’s lender no longer as a right to the property
- After all that you will receive the title deeds
- Hooray! You finally receive they keys to your dream home
We go into more detail in our step-by-step guide to buying a home.
How to apply for a mortgage
Make sure you understand the differences in the types of mortgages before you apply. We explain the pros and cons of the different types of mortgage.
When you apply for a mortgage, the bank or building society will ask for a lot of information.
A successful mortgage application will depend primarily on your:
- Salary
- Savings
- Age
- Credit score
Most mortgage lenders will cap the loan-to-income ratio at 4.5 times your income. So if you earn £30,000 a year, you could be offered a loan of £135,000.
Home loans are typically repaid over mortgage terms of 25 to 40 years in monthly instalments. The bank charges interest on your loan, so you will pay back significantly more than you borrowed.
Take the time to check the interest rates being charged as some mortgage lenders offer better deals than others.
Your mortgage lender will want lots of information from you to prove your outgoings so it can assess how risky you are as a borrower.
Outgoings you may need to show include:
- Rent
- Utility bills
- Council tax
- Travel costs
- Childcare
- Entertainment
- Debt repayments
Documents you will need for the mortgage application include:
- Utility bills
- Proof of any benefits received
- P60 form from your employer
- Your last three to twelve months’ payslips
- Passport or driving license (to prove your identity)
- Bank statements of your current account for the last three to six months
- Statement of two to three years’ accounts from an accountant if self-employed
- Tax return form SA302 if you have earnings from more than one source or are self-employed
- Self-employed people should look to provide information alongside their tax return, which supports what the SA302 says about their income, such as bank statements
Read our article for help: seven tips on how to get a mortgage.
What if my mortgage is rejected?
This won’t be the news you want to hear but for one reason or another your lender might reject your mortgage application.
You should address the potential reasons why you were refused a mortgage and give yourself the best chance of getting approved next time around.
Ask the lender why your mortgage application was declined. They might not give you answer but it’s worth a try.
The next step is to look at your credit history to see if you can see anything that may have put the lender off. Read about credit scores.
Some common reasons for being refused a mortgage include:
- Recently missed or made late payments
- Default or a county court judgement (CCJ) in the past six years
- Too many credit applications in a short space of time in the past six months, resulting in multiple hard searches being recorded on your report
- You’re not registered to vote on the electoral roll (this is used for proof of your address and identity)
- The lender has calculated you won’t be able to make the repayments
- Self-employed or are a contract worker and can’t prove you have consistent income
- There are mistakes such as incorrect addresses or other errors on your mortgage application form
- You may not fall into the target bracket for the type of mortgage you’ve applied
If you are self-employed, read our article here on what the mortgage rules are and what you need to do to get accepted.
Steps to convince lenders you’re ready for a mortgage could include:
- Keeping up with your regular payments such as mobile phone contracts and utility bills
- Consider paying off existing debt if you can and reducing your credit usage (avoid using more than 30% of your credit limit). You can read about that here.
- Reconsider the maths of your mortgage application by increasing the amount you earn each month or decreasing your living costs.
- You could also try to lower the amount you need to borrow by increasing your deposit – for example, save more, or use one of the government schemes such as a lifetime ISA.
Do I need a mortgage broker?
You don’t have to use a mortgage broker but it might be a good idea to do so, particularly if you’re inexperienced with mortgages.
Mortgage brokers get access to loans that aren’t widely available elsewhere, as well as notifications of flash sales of mortgage deals available for people with low deposits. Still, some loans are only offered by lenders directly to the borrower, so consider looking for those as well.
Still, some loans are only offered by lenders directly to the borrower, so consider looking fort hose as well.
Pros of using a mortgage broker
- Brokers will be able to give you a picture of the mortgage market and recommend what they consider to be the best deal for you circumstances
- Your mortgage application is less likely to be rejected
- You will have access to deals that are only available through intermediaries
Cons of using a mortgage broker
- You might have to pay a fee (some don’t charge fees though)
- If you use a mortgage adviser who works for a lender, they will only have access to their own products rather than being an unbiased view of the market as a whole
If you want to know more, we can help you decide whether to use a mortgage adviser.
What are guarantor mortgages?
Currently the only 0% deposit mortgages available are guarantor mortgages. These require a close family member to agree to cover the mortgage repayments if you can’t.
Their home or savings are used as security. As their name will be on the loan agreement, should they be unable to make your repayments then they risk their home being repossessed or losing their savings.
The money will be held in a savings account with the provider until a certain percentage of the loan has been paid off. Read more about whether it might be a good idea to go down the guarantor mortgage route here.
Can I get a mortgage without a deposit?
With 0% deposit mortgages, the bank or building society lends the borrower the full amount needed to buy your home.
The biggest risk was the threat that should house prices fall, you would be left in negative equity, meaning you owe the lender more than what your home is worth.
Saving up as big a deposit as you can will increase your mortgage options and ensure you get the best mortgage deals.
There are ways to get on the property ladder with a small deposit and lots of schemes to help first time buyers. Read our guide to 5% deposit mortgages here.
Do I need life insurance to get a mortgage?
You aren’t usually obliged to take out life insurance to secure a mortgage.
But if you have children or other people who are dependent on you then you might want to for peace of mind. The idea is that this will cover your family’s costs should the worst happen to you.
This is not so much of a concern for those with no dependents as the sale of the property after your death would likely cover the outstanding balance on your mortgage.
You might also want to take out life insurance if you want to leave your home to a friend or charity in your will.
Find out more about how mortgage life insurance works.
Help for first-time buyers
There are lots of government initiatives designed to help first-time buyers.
Do I pay stamp duty as a first-time buyer?
One of the big perks for first-time buyers is they have a higher stamp duty threshold compared to existing homeowners.
Since 2017, first-time buyers in England and Northern Ireland have had from a higher stamp duty threshold than those who have bought a home before.
Those getting on the property ladder for the first time don’t have to pay stamp duty for a home worth up to £425,000.
The rates for first-time buyers are as follows:
| Property value | Stamp duty rate |
| Up to £425,000 | 0% stamp duty |
| The portion between £425,001 and £625,000 | 5% stamp duty |
| Over £625,001 | No first-time buyer’s relief, so you pay the standard rates |
However, the threshold at which first-time buyers must start paying stamp duty will fall to £300,000 from 31 March 2025. The threshold at which stamp duty relief ends will also fall, from £625,000 to £500,000.
This means that if you’re buying a property for between £300,000 and £425,000, you’ll save money if you can complete a purchase before 31 March 2025.
For more about stamp duty thresholds in the UK, read our guide here.
Government schemes for first-time buyers
Lifetime ISA
Anyone aged between 18 and 39 can open a Lifetime ISA and get a government bonus of 25%.
If you open this ISA at 18 and make the maximum contribution every year until the age of 50 (when the bonus stops being paid) you could get a total top up of £32,000.
You can only use the money to buy your first home or for retirement from the age of 60.
We explain how a Lifetime ISA works.
Help to Buy ISA
This is a tax-free savings account where for every £200 you save, the government will add 25%.
There’s a maximum government bonus of £3,000, which is paid to your solicitor when you buy your first home. The Help to Buy ISA maximum house price is £250,000 (or £450,000 in London).
This product is now closed to new applicants, but if you have one already you can continue saving into it until November 2029.
We outline the differences between Help to Buy ISAs and Lifetime ISAs in this article.
Shared ownership
Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount.
You can buy anything from 25% up to 75% and can increase your stake at a later date.
New shared ownership
Announced in September 2020, the minimum initial share to buy in a property is reduced from 25% to 10%.
Additional shares in the home can be bought in 1% instalments with heavily-reduced fees.
It will also include a ten-year period for owners where the landlord agrees to cover the cost of any repairs and maintenance to the property.
Mortgage guarantee scheme
In 2021 a new government scheme was introduced for properties worth up to £600,000 was announced.
The scheme was designed to encourage lenders to offer 95% loan to value (LTV) mortgages to help people to buy a home.
Find out more about the mortgage guarantee scheme.
Starter homes initiative
The government is working on a scheme that will see 200,000 new-build homes in England sold to first time buyers aged between 23 and 40 with a 20% discount.
To receive updates on the progress of these homes you can sign up to their newsletter.
What should you not do when buying your first home?
Buying a house can be a complicated process with lots of moving parts.
There are a number of things that you should avoid when buying your first home, such as:
- Not getting an agreement in principle
- Underestimating how long it takes to get a mortgage
- Not checking your credit score
- Not being registered on the electoral roll
- Underestimating how much it costs to buy a home
- Not understanding the difference between leasehold and freehold
- Not asking enough questions
Compare the best mortgage deals with our free comparison tool.
Can I bank on house prices falling?
There is so much speculation about house purchase prices, it’s something of a national pastime.
House prices are currently predicted to fall by between 5% and 10% during 2023, due to a drop in demand for new homes, caused by rising inflation and mortgage rates.
While you are buying a home and not an investment, many prospective buyers are biding their time to see if they can save money by moving into the market at a later date.
Find out more about whether or not first-time buyers should delay buying a new home.
If you want to read more about house price predictions over the coming years, check out our article: will house prices drop?
Also try out our free mortgage comparison tool below.
Find mortgage deals with our best buy tool
This is how the tool works:
- You can search and compare mortgage deals
- It only takes a couple of minutes and no personal details are required to search
- Once you’ve got your result, you can speak to a mortgage broker if you need advice
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