The ultimate guide for first-time buyers
Let’s face facts; purchasing real estate as a first-time buyer in the UK is arguably harder than it has ever been.
According to Nationwide, the average UK house price peaked above £260,000 for the first ever time in February, reaching £260,230 having soared by a staggering £30,000 during the previous 12 months.
At the same time, inflation soared to 6.2% in the 12 months to February 2022, the highest CPI 12-month increase since January 1997.
In this article, we’ve created an effective guide to buying your first home and navigating some of the challenges mentioned above.
Getting a mortgage and raising a deposit
Unless you have huge cash reserves (in which case, lucky you), you’ll need a mortgage to successfully purchase a new home.
This is a secured lending agreement between you and a qualified lender, with the property used as collateral against the amount borrowed. However, it’s hard to secure a 100% mortgage in the current climate, so you’ll also need to commit some upfront cash in the form of a deposit.
As you can imagine, the more you can save as a deposit, the less you’ll need to borrow through a secured mortgage. This can reduce your total borrowing and the amount of interest repayable over time, so being diligent and saving can really help you to reap rewards.
You’ll need to save at least 10% when securing a mortgage, while a deposit of 20% or above can really help to deliver long-term savings.
Budgeting for the costs of buying a home
In addition to the mortgage and its associated arrangement and booking costs, there’s a raft of other expenses to consider when buying a home for the first time.
Many of these are operational in nature, including conveyancing solicitors’ and valuation fees, detailed property surveys and removals.
Then there’s stamp duty, which is a tax that’s levied on single property purchases and varies depending on property values. You won’t pay any stamp duty at all on home’s priced £125,000 or under, for example, while those valued between £125,000 and £250,000 will be charged a levy of 2% overall.
This increases incrementally (peaking at 12% above £1.5 million), so you’ll need to factor this in when planning your purchase.
Finding your home
When it comes to finding your dream home, you’ll need to operate comfortably within your budget and identify viable properties within a chosen catchment area.
So, if you’re a first-time buyer looking for a home in Birmingham, you should consider a shortlist of potential properties while appraising them on factors such as value for money, space, local amenities and transportation links.
You can then make an informed decision and make an initial offer, before either entering into a period of negotiation or having your bid accepted and waiting for the vendors to move out or complete their part of the chain.
We’d just recommend patience at this stage, as negotiating an agreeable offer and processing transactions can be time-consuming and fraught with potential risks.