First-Time-Buyers

The First Time Buyers

There is much more to buying your first home than first meets the eye. However there are lots of schemes and incentives to help get you on that first rung of the housebuying ladder.

Buying our first home is probably the biggest single purchase most of us will ever make.

According to the Govt, the average first house costs £153,393 and the average salary is around £25,000!  However there is no need to panic. You can still make that important first step into buying property.

How much can I borrow?

This will depend on whether you have a deposit, how much you earn and what monthly repayments you can afford to make. Saving for a deposit can take years. Borrowing from family or friends is ok if you are lucky enough to be able to do so. Lots of people are now looking to buy a home with a friend and even complete strangers! This is not as bad as it sounds as it gets a foot on the property ladder.

Start by speaking to an Independent Mortgage Adviser who has access to the ‘whole of market' Some advisers are tied to just one or a limited panel of companies which means you may not be getting the best advice available.

Some lenders will use a form of affordability calculation weighing up incomings against outgoings. However, most lenders use income multiples and will usually lend up to three times your annual income if you are buying alone. If you are buying as a couple, you can hope to get either three times the first income plus one year of the second income, or two-and-a-half times your joint income.

Other lenders will lend 4 or 5 times your annual salary or perhaps more as they will often offer higher income multiples on the basis that they expect your earning capacity to increase in the near future. However this should only be considered in circumstances where you know that your income is going to increase to allow you to keep up with repayments. Remember, you will be paying the loan back for a very long time.

If you're struggling to raise the money by yourself, you could consider some of the following options:

• Get help from your parents or a close relative or ask them to guarantee your mortgage so you can borrow more, but make sure they know they are entering into a legally binding commitment.
• Consider buying with a friend or friends. Introducing an additional income to the equation will increase your options and buying power. It is now possible to buy with a group of friends which many see as an acceptable alternative to renting.
  Shared Ownership.
• Look into buying a home from a housing association on shared ownership terms to make it more affordable.
• Whichever option you choose, be careful not to over-commit yourself and bear in mind there may be times when money suddenly becomes unexpectedly tight.

Other costs involved with buying a property:

• If the price of the property you plan to buy is more than £125,000, then you have to pay a government tax called Stamp Duty Land Tax (SDLT). If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and five per cent of the whole purchase price. See the table below for more detail. If the purchase price is £125,000 or less you don't pay any SDLT.
• If you are a first-time buyer the threshold for when you start to pay SDLT is £250,000. This is only if you have never owned a house or flat in the UK or anywhere else in the world. If you are buying with someone else they must never have owned property before either. This higher threshold applies to purchases completed on or after 25 March 2010 and before 25 March 2012.  
• The lender will need to carry out a valuation of your prospective home to check it is worth the money it is lending you. This will cost you from around £150. 
• Lenders may also charge an arrangement or completion fee. 
• Legal fees can be a major expense. Your solicitor or conveyancer will charge a fee for its services. You can sometimes cut these costs by opting for online conveyancing offered by companies such as mousesale. 
• You'll also need to set aside money for insurance, moving and furnishing costs.

New or Second hand property?

You may be better off going for a new property. When buying a newly-built or converted home it is likely the home will come complete with NHBC's 10-year warranty called 'Buildmark' and be low on maintenance. Many developers offer generous deals to first-time buyers. Some may even contribute towards the deposit for you on selected properties and many offer free carpets and curtains or other incentives. mousesale have arrangements with some of the UK's largest new housebuilders across the UK.

If you are interested in finding out more, please contact us in confidence and without obligation.

Join mailing list here.

Happy Househunting!