Buying a house in London is a complex and challenging process, particularly if you happen to be a first time buyer. You qualify as a first-time-home buyer if you are purchasing your main or only residence and never previously owned a freehold or leasehold residential property either in the UK or abroad.
Here are some important pointers for first time home buyers:
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Six steps to buying your first home in London
1. Know how much deposit you need
Before you even begin looking for or viewing properties, you need to know how much you need to save for the deposit. Generally, we recommend saving up between 5 percent and 20 percent of the value of the property you intend to purchase.
For instance, if you are looking to purchase a property that costs £100,000, it is advisable to set aside a minimum of £5,000 (5 percent).
2. Calculate the other costs
Other than monthly mortgage payments, you need to factor in many other costs before buying your first home, which include:
- Survey costs
- Initial costs related to furnishing and decorating
- Removal costs
- Solicitor’s fee
- Buildings insurance
- Mortgage arrangement
- Valuation fees
- Stamp Duty. If you are buying the property as your main residence, you do not need to pay Stamp Duty for the first £300,000 for homes valued up to £500,000.
3. Ensure you can afford a monthly mortgage
When you’re buying a home for the first time, it is important to ensure that you can afford the monthly mortgage repayments.
It is recommended that you plan your budget before you consult us for zeroing in on a property. Mortgage lenders carry out stringent checks when you make a mortgage application. These checks relate to whether you’re able to afford the mortgage and a stress test on your ability to repay the mortgage if interest rates rise or if there are changes in your circumstances, including starting a family or an approaching retirement date. While applying for a mortgage, you must provide proof of your income and show evidence of outgoings.
You will be required to provide evidence and information related to your income and outgoings. These include:
- Bank statement and payslips as proof of your income
- Household bills
- Other expenses including childcare, clothing, and travel
Those who are self-employed need to furnish business accounts and tax returns of the last two years prepared by a qualified accountant.
Guarantor mortgage can be an option if you’re unable to secure a mortgage. A guarantor mortgage is when a parent, close relative, or guardian agrees to take responsibility for paying the mortgage when you’re unable to do so. These are legally-binding arrangements and should only be entered into if the guarantor is able to afford mortgage repayment.
An experienced estate agent London can help you to find lenders who offer guarantor mortgages.
4. Start saving early
Now that you have an idea of the costs involved with respect to the deposit, monthly mortgage, and other costs, start saving up as soon as possible. You can begin putting a defined amount of money every month in your savings account, which would help you meet your home acquisition goal.
While you should, at the least, save up 10 percent of the property cost to secure a mortgage, 25 percent will get you access to the best mortgage deals.
A study indicates that young families have to save up for 12 years to be able to pay a deposit of 20 per cent to buy their first home in the UK and save for 26 years to buy a flat in London.
5. Choose between leasehold and freehold
Your estate agent can guide you on which types of ownership are prevalent in the neighbourhood of your interest and the one more suitable for your requirements. Generally, most standalone homes are of freehold type, while most apartment blocks in London are leasehold. While you are entirely responsible for the management and maintenance of a freehold property, the advantages are that there are no charges related to maintenance and concerns related to failure on the part of the landlord to maintain the building. As a freehold owner, you can also decide how you want to maintain your building’s exterior and appearance.
Some newly-built properties are of shared freehold type where a group of tenants in favour buy the freehold from the landlord and are collectively responsible for maintenance and management of the property.
6. Consult professional estate agents
Looking for a home for the first time in London can be challenging and requires considerable patience, diligence, and organization. With ever-changing housing market dynamics, it is important to consult a professional estate agent London to find the best deals. Reputed agents ensure you are shown properties that best match your budget and other criteria.
If you are looking to rent or purchase a home in the city, speak to our estate agent London today. We can help you find a home in the heart of London. Contact our Soho office on 020 7734 4062, fill in the form below or pop in to our office on Broadwick Street and we can point you in the right direction.