10 Questions for First Time Buyers

Your home may be repossessed if you do not keep up repayments on your mortgage.

All information was accurate at the time of publication.

23rd April 2024

Calling all first-time buyers! Taking that leap onto the property ladder is exciting, but it can also be a daunting experience. Here are 10 Questions for First Time Buyers, that we get asked everyday. In this blog, we'll tackle those common questions head-on, giving you the knowledge and confidence to start the journey to purchasing your first home.

Ever wonder if you qualify as a first-time buyer? It can get confusing! In general, it means you're buying a home for the very first time. But some lenders might have stricter rules.

Nationwide are one of the more lenient with their first time buyer definition and say: “Applicants who haven’t held a mortgage in the last three years (this includes UK and non-UK mortgages).”

HMRC define first time buyers as “an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.”

Don't worry if your partner isn't a first-time buyer! This is a common situation, and we can break down what it means for buying your first home together.

The main advantage of being a first-time buyer is access to special products and discounts to help you out. We can see if you can still qualify for those! Just keep in mind that some things, like stamp duty relief, typically require both partners to be first-time buyers. The good news is that if you have a Lifetime ISA (LISA), you can still get the 25% bonus on your savings even if your partner isn't a first-time buyer.

Ever wonder how much you need to save for a deposit on your first home? It's a common question, and there's no one-size-fits-all answer. The good news is, you might have more options than you think!

While traditionally a 5% deposit is the minimum, some lenders offer mortgages with even lower down payments. Recently, some lenders have even brought back 100% mortgages, meaning you might not need a deposit at all.

Of course, saving a bigger deposit has its perks. It can give you access to better mortgage rates, which means lower monthly payments in the long run. So, while a 5% deposit is possible, aiming for 10% or even 15% could save you money in the long run.

No matter where you are on your saving journey, we're here to help! We can chat about your options and create a plan to get you into your dream home.

Wondering how much you can borrow as a First-Time Buyer? It's a big question, and every lender does their own calculations (don't worry, we'll walk you through it!). Generally, for folks with no debt, lenders might lend 4 to 4.5 times your annual income. So, if you make £50,000, that could be a ballpark of £200,000 to £225,000 to borrow. There are more generous lenders and if you tick the right boxes, some big high street lenders may lend up to 5.5x your income.

However, things like student loans, car finance, credit cards, ground rent and service charges, can affect what you can borrow. The best way to get a clear picture is to chat with us early on. We can crunch the numbers and give you a personalised idea of what's possible!

Wondering about fees when buying your first home? It can get confusing, so let's break it down!

There will be some costs involved, but they can vary depending on your situation.

We generally charge a fee of £495 per mortgage for our services. We’ll send you through a guide to our services and fees after our very first conversation to make sure there are no surprises for you.

For lenders, there are often fees too. These can be a bit tricky, but that's where we come in! We'll help you find the most cost-effective option. Sometimes, higher fees might mean a lower mortgage rate. We'll chat about the options and see what makes the most sense for your budget. The arrangements fees are typically £495, £995, £1,495 and can be paid upfront, or added to the mortgage.

Good news! Usually, lenders cover the basic property valuation to make sure the price is fair and the building is sound. Some lenders may charge £100 for the basic survey. The lenders will also look to see if it’s next to any commercial units which may cause problems (think take aways, pubs, etc.). We’ll talk to you about the different levels of survey and if it makes sense to upgrade to a more detailed survey.

Finally, there are legal fees involved in buying a house.

We can help you find a conveyancer (fancy lawyer talk for someone who handles the legal side) who fits your needs. The good news is you can choose your own solicitor, as long as they're approved by the lender. No worries, we can easily check that for you!

Ever wonder how much stamp duty you'll pay as a first-time buyer? Here's the lowdown!

There's a handy thing called First Time Buyer Relief that can save you some cash on stamp duty. In England and Northern Ireland (as of September 22nd, 2022), you won't pay any stamp duty at all if your new home costs £425,000 or less. That's a pretty sweet deal!

For homes priced between £425,001 and £625,000, things work a bit differently. You'll only pay stamp duty on the amount that goes over £425,000, and the rate is just 5%. So, let's say you find your dream home for £500,000. You'd just pay stamp duty on the difference between £500,000 and the £425,000 threshold, which is £75,000. In that case, your stamp duty would be 5% of £75,000, which comes out to £3,750.

We like to use www.stampdutycalculator.org.uk to help with our calculations.

Feeling stuck between a 2 and 5 year fixed-rate mortgage? That's a common question for first-time buyers! The good news is, there are options. Most lenders offer fixed rates for 2, 3, 5, and even 10 years, but the 2 and 5 year terms are usually the most competitive.

The 2 year is obviously the shortest and allows you to review your mortgage again in 24 months time. It gives you a chance to get comfortable with your mortgage payments and lets you re-evaluate your rate in a couple of years. This might be a good fit if you're planning to move in 2 years or want to keep your options open.

A 5 year fix offers more stability. Your monthly payments won't change for 5 whole years, giving you peace of mind and a chance to settle into your new home. This could be perfect if you plan to stay put for a while and dislike the idea of revisiting mortgage rates every 2 years.

Don't worry, we won't leave you hanging! When we chat, we'll walk you through all the fixed-rate options and help you find the perfect fit for your situation.

Let's start with some easy wins. Gather your documents like your driver's license and bank statements - make sure the address matches everything. Having the last 3 payslips and bank statements handy is a plus.

Another tip? Check your credit report for any mistakes. Check My File look at Experian, Equifax and Trans Union in one and offer a free months trial.

The best part? Chat with us before you even start house hunting! We can help you understand what kind of mortgage you might qualify for. This way, you can search with confidence, knowing exactly what you can afford.

Ever wonder how some first-time buyers manage to swing a mortgage? Sometimes, they have a secret weapon: a guarantor mortgage (also sometimes called a joint borrower, sole proprietor mortgage these days).

This is where a superhero, usually a parent, agrees to back you up. If you can't make your monthly payments for some reason, they'll step in and cover the cost.

Here's the perk: since your superhero isn't actually on the property title (the deed), you might avoid some extra fees. Plus, their income can help you borrow more for your dream home.

Of course, with great power comes some responsibility. Being your guarantor affects their financial picture too. Their existing debts and future credit needs will be considered, and a second mortgage might strain their budget. Another thing to think about is age. Most mortgages have to be paid off by 70, so if your superhero is getting on in years, you might have to shorten your loan term. This means higher monthly payments, but on the bright side, you'll end up paying less interest overall.