First-time buyers guide

Being able to buy your first home is exciting, as it means you can become the proud owner of your own property. Our first-time buyers guide covers the various steps that are involved along the way.

Costs to consider when buying a property

There are several costs to weigh up before you buy a property, including:

Stamp duty for first time buyers

Stamp duty is one of the larger costs that need to be considered, however for first-time buyers, this is not the case thanks to the stamp duty land tax relief. If you are a first-time buyer, stamp duty is not due on the first £300,000 of the property’s value. For any first-time buyers purchasing a property between £300,000 and £500,000 will pay 5% stamp duty. If you are purchasing a property for more than £500,000, will not be entitled to any relief and will be required to pay SDLT at normal rates.

Deposits

Perhaps the biggest hurdle to overcome is putting together a large enough deposit. In most cases you will need a 10% deposit to buy a home, although 95% mortgages (that require a 5% deposit) are becoming more common. Whether it’s 5% or 10%, this figure is based on the sale price of the property you want to buy.

Applying for a mortgage

The next step is to apply for a mortgage, which can be done directly through a lender or via a broker. A lender will show you their own deals and a broker will shop around to find the best deals on the market – some of which are not publicly available without their help.

It’s a good idea to check your credit score before applying, as you will undergo a full credit check to assess whether you are financially secure enough to afford a mortgage.

Government schemes for first time buyers

The Government has a few first-time buyer schemes that could make it easier to secure a property – although you need to ensure you are eligible before applying. These schemes include:

  • Shared ownership

You buy between 25% to 75% of the property from the council or housing association and pay off the remaining amount over a fixed period.

  • Help to Buy: Equity loan

Use a deposit of 5% and borrow up to 20% (40% in London) of the purchase price interest free. The loan remains interest free for the first 5 years.

  • Help to Buy: Mortgage guarantee scheme

Available on properties worth up to £600,000, you apply for a 95% loan to value mortgage with a lender that offers the scheme.

  • First Homes

If you earn less than £80,000 a year (£90,000 in London) you can get a mortgage discount of up to 50% on a new build home.

Choosing the right property

When it comes to choosing the property, you’ll need to balance your budget with practical requirements. You’ll already know what you can afford, so start searching within that price range in the areas that you’d like to live in.

Based on your current circumstances or plans for the near future, think about some of the features you want the property to have. For example, do you need a garden or garage? How many bedrooms will you need and what kind of storage space will suit you best?  Also consider the location to nearby transport links and other important amenities such as supermarkets and schools.

Viewing and making an offer

It can take time to find your ideal home, so be persistent and don’t rush into making a commitment unless you are 100% happy.

Make a list of questions you’d like to ask buyers and a checklist of things to inspect when you are walking around. When you put in an offer, if you can pay in cash, or produce a ‘mortgage in principle’ from a lender, you stand a better chance of it being accepted (providing the offer is fair) as it demonstrates that you are more likely to follow through and complete the purchase.

Hire a conveyancing solicitor

You’ll need to hire a conveyancer or property solicitor to take the process further, as they will draw up the draft contract and oversee the surveys and other legal requirements. They’ll work on your behalf to negotiate where needed and ensure there are no hidden surprises in the contract, while the seller will also have their own conveyancer working for them.

Exchange of Contracts

The exchange of contracts happens via the conveyancers and at this point you are legally bound to proceed with the transaction. If you pull out at this stage, it could lead to you losing your full deposit.

You’ll then be asked to put down an initial deposit, usually around 10% of the property value, which is then sent to the seller via your conveyancer. A completion date is agreed, and this usually takes place between 7 to 28 days later.

Completion

When the completion date arrives, the remaining funds are sent to the seller and the property deeds are transferred to your name. This is the day when you become the legal owner of the property and can collect the keys to move in. Once everything is completed, the property is now yours and you can make arrangements to transport your possessions to settle in.

Buy your first property with Stadium Residential

Looking to start the process of buying a property? Get in touch with our team at Stadium Residential today to explore your options.