Advice for First Time Property Buyers

If you want to get your foot on the property ladder in London, there are several important things to consider before settling on a house and completing the purchase. Here at GLP, we love helping people become homeowners, so we’ve put together some tips on making buying property for the first time easier, what to expect throughout the process, and any additional costs and fees to budget for.

Table of Contents

Consider a New Build

While lots of properties in London offer stunning period features, a new build may be something that you are interested in if you prefer a modern style of home or want to avoid the common issues that sometimes arise with older properties. Along with this, developers are often targeting first-time buyers who can move in quickly without having to sell their current property first, so many offer equity loans.

Buying with Friends

Many first-time buyers will buy their property as a couple. But if you are single, saving up for a deposit and all the other fees involved with buying a property for the first time can be much harder. To combat this, some people have decided to buy with their friends instead. If you have a close friend who’s also interested in getting on the property ladder, you might want to consider getting a ‘tenancy in common’ mortgage, where you can each own 50% of a property.

Help from Parents

Two-thirds of first-time buyers in London manage to get on the property with support from mum and dad. While not everybody is in a position where they can ask their parents to help them out with paying a deposit, it’s always worth asking – you never know if your parents have planned ahead for this day and put some money aside for you. If your mum and dad can’t help with a deposit, they may be able to help out by acting as a guarantor for your mortgage, which can increase your chance of having your application accepted.

Shared Ownership Homes

Shared ownership schemes are a great solution for anybody who wants to purchase their first property on their own but would take years to save a deposit. With a shared ownership scheme, you can get on the property ladder with less since they allow you to start out by purchasing a percentage of a property while paying rent on the percentage that’s still owned by the developer. Over time, you can buy more and more of the property until 100% is in your name. The best part is even though you only own a percentage of the property, it’s still yours to do what you like with.

Property Auctions

If you want to get a bargain with your first property and are considering buying something that you can renovate and make your own, a property auction might be worth considering. However, this is usually only a good option for people with great DIY skills or enough money aside to hire professionals since most houses sold at auction need a lot of work and are impossible to sell on the open market.

Rent to Buy

If you’re currently renting a property in the capital, a rent-to-buy option might also be worth thinking about. This situation allows you to first move into a property as a rental tenant with the option to purchase the property once you are in a position to do so. After renting the property for some time, the deposit is usually much smaller compared to traditional buying. In most situations, the property price will be agreed on when you move in as a tenant, so even if it takes you a while to save up for your deposit, you won’t need to worry about any surprise increases.

Your Guide to the Process for First-Time Buyers

Whether buying a property has been something that you’ve been working towards for some time, or you have decided that this is the year that you start preparing yourself for property ownership, it’s important to be aware of all the steps involved in the process:

Save a Deposit: The first thing to do is work out how much deposit you’ll need. Mortgage lenders tend to prefer larger deposits, so it’s good to aim high whether you’re saving up or are getting help from family. 10% is usually the minimum deposit required, although more mortgage options that accept a 5% deposit are becoming available today.
Get a Mortgage: Before you can buy your first home, it’s crucial to know that you can get a mortgage to pay for it. Unless you’re lucky enough to have the cash, most people need a mortgage to buy their first property. There are several types of mortgages available, so it’s a good idea to speak to lenders or brokers to determine which type works best for you.
Consider Extra Costs: You will also need to think about any additional costs involved in the process such as legal fees, stamp duty if you’re buying a property worth over £300,000, mortgage arrangement fees, property surveys, and more.
Find Your First Home: Once you have all the money in order, it’s time to start looking for your perfect first home. Search the properties listed on the Greater London Properties or use property listing sites like Rightmove and Zoopla to find properties within your budget in the areas that you want.
Make an Offer: Once you’ve found your perfect first home, you should put in an offer. Do this by contacting the estate agent in charge of managing the home and letting them know how much you are willing to pay. As a first-time buyer, you may be asked to provide proof that you can get a mortgage.
Completion: If your offer is accepted, the next step is completion, but there are a few things that must be done to get there. Most of the work at this stage will be carried out by solicitors. You will also need to secure the mortgage that has been agreed in principle by the lender, which usually takes around four weeks. The contracts will be ready to exchange once the mortgage has been approved and the sale terms are agreed. At this point, you will need to pay the 10% deposit. Once completion day arrives, you’ll be given the keys and the home is yours.

What Costs are Involved?

When buying your house for the first time, it’s important to consider all the additional costs that will be involved in buying and running the property. These include:

Deposit: This refers to the amount that you put towards the cost of purchasing your property. The larger your deposit, the more mortgage deals you can get access to. While more and more first-time buyers are now buying with smaller deposits thanks to 95% mortgages, it’s always a wise idea to save for a larger deposit wherever possible to improve your options and reduce the monthly payments. 40% tends to be the best deposit amount for getting the best mortgage deals.
Valuation Fee: Your mortgage lender will charge a valuation fee to determine the value of the property and make a decision on how much they are prepared to lend to you. The cost can be between £150 and £1,500 depending on the value of the property. Some mortgage lenders offer this for free.
Survey Fees: Once you have found a property you love, it’s a wise idea to have a survey carried out to check the condition. A chartered surveyor can be hired to carry out a homebuyer’s survey or full structural survey depending on the type, condition, and age of the property you want to buy.
Stamp Duty: First-time buyers in the UK are not usually required to pay stamp duty up to £300,000. If you are purchasing a property worth over £300,000, use a stamp duty calculator to determine how much to save for.
Legal Fees: You also need to budget to pay a solicitor or conveyancer to conduct all the legal work that is involved in buying a house, including carrying out local searches.
Broker Fees: If you’re using a broker to find the right mortgage deal for you, they will usually charge a fee.
Electronic Transfer Fee: This covers the lender’s cost of transferring the mortgage money to your solicitor, and usually costs around £40-50.
Insurance: Most mortgage lenders require that buyers insure the mortgaged property. Along with getting insurance for the building itself you may also want to consider getting contents insurance, which will protect your belongings inside the home.

Whether you’ve been diligently saving for years, are getting help from your parents, buying your first house with your partner, or teaming up with a friend to get on the property ladder, understanding the process and costs involved in buying your first property is important. Need advice? You can get in touch with us via email or phone and we’ll be happy to answer any questions that you might have about getting on the property ladder for the first time.