Buying your first home can feel like a daunting prospect.
Yes, it’s exciting, but it’s not without stress. It’s good to be prepared, so you know what to expect.
Buying a house is not as simple as finding somewhere you like, getting a mortgage then putting an offer in.
There are many steps and costs before and after the fun part of house-hunting.
Here’s what to expect when buying your first home.
What is a first-time buyer?
To meet the requirements of being a first-time buyer you must not have previously owned a property either by yourself or with another person, anywhere in the world, including if you inherited a house.
This means even if you have never owned a property (or land) but the person you’re buying with has, you are still not considered a first-time buyer.
What are the benefits of being a first-time buyer?
Prior to 2020, the main advantage of being a first-time buyer was that Stamp Duty Land Tax was waived up to £300,000.
This is currently a contentious subject for first-time buyers, as the Government has given this benefit to all buyers to further stimulate the UK housing market.
Sadly, this does mean first-time buyers are demarginalised as they no longer have this as their key benefit. However, this scheme, which can save buyers further along the ladder up to £15,000, will end in September and will return to being for first-time buyers only.
Despite this, you will still find yourself in an advantageous position when it comes to being favourable to sellers.
Being without a ‘chain’, meaning you don’t have a house to sell, which could cause them delays, means often first-time buyers can put in offers lower than other prospective buyers and be accepted, as it’s likely things will move a lot quicker with them.
The extra costs of buying your first home
One thing you need to be hyper-aware of is that the cost of buying a house is not only what the house costs. There are many other costs attached to buying a home that you need to account and and save for.
A mortgage is basically a (very big) secured loan; secured against the property you own, which you pay back with interest. This can be an interest-only mortgage or a repayment mortgage, typically over 20 to 30 years.
To secure this loan you need to put a deposit down – the parameters are currently shifting as the Government are securing mortgages with only a 5% deposit for a short while.
Although this will help a lot of people to get onto the property ladder, the more deposit you can get together, the more beneficial this will be for you. The mortgage rate you get will be better and the less interest you will repay.
The Government provide additional ways to get first-time buyers on the ladder by way of the Help to Buy Equity Loan, where a Government loan covers 20% of the deposit, meaning you only need to find 5% yourself, and Shared Ownership, where you own a percentage of your home and rent part of it as well as the Lifetime ISA scheme.
The deposit is the main cost you will need to save for, and then the stamp duty, if applicable.
After this, you also need to expect to pay around £2,000 for conveyancing or solicitor fees. Their job is to draw up the contracts of the house sale, securing the payment of funds, dealing with land registry etc. which can also cost up to a thousand pounds.
Surveys are also chargeable and vary in cost dependent on how comprehensive they are. These can be up to £500.
Moving costs also need to be included in your budget. A lot of this can be done yourself if you don’t mind getting stuck in.
Once you get the keys to your first home, you need to make sure you have home insurance, pay council tax and utility bills – then, you get to enjoy your new home – congratulations!
For more resources on buying your first home and tips for what to expect head over to my blog here.
Further tips can be found on my YouTube channel and Instagram for daily money saving advice, tips and hacks for living your best life on a budget, and don’t forget to head over to my blog for your free budgeting trackers.
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source https://metro.co.uk/2021/03/10/what-first-time-buyers-should-know-before-they-apply-for-a-mortgage-14217535/
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