A First-Time Buyer’s Guide to Buying Your First Home
Buying your first home is an exciting milestone, but the process can sometimes feel overwhelming.
Saving your deposit is the first step, but there is also a legal process to follow once you are ready to get on the property ladder.
Choosing a Solicitor, finding the right mortgage offer, understanding searches, debating if you need a survey, uncertainty on how to sign legal documents, to finally getting the keys - there is a lot to think about.
Olivia, a Solicitor in our conveyancing team, has put together this guide to help you understand the journey from saving your first deposit through to completion, and, importantly, some of the costs and considerations that first-time buyers can easily overlook.
1. Start with your budget , and remember that your deposit isn't the only cost
When saving for your first home, it can be tempting to focus solely on building your deposit. However, there are a number of additional costs to consider when working out how much you will need.
These can include:
- Your deposit
- Solicitor or conveyancer's fees
- Searches
- Land Registry fees
- Mortgage or broker fees
- A property survey
- Stamp Duty Land Tax, where applicable
- Buildings insurance
- Removal costs
- Furniture and appliances
- Immediate repairs or improvements
- Council Tax and household bills
It is worth allowing some money for unexpected costs too. Moving home can be expensive, and having a financial buffer can make the process considerably less stressful.
Don't forget about - eligible savings schemes for first-time buyers
If you're saving for your first home, it is worth looking into whether you are eligible for any government-backed schemes.
A Lifetime ISA (LISA) allows eligible savers to receive a 25% government bonus on contributions, subject to the scheme's rules.
There are restrictions on the type and value of property that can be purchased using the funds, so make sure you understand the current requirements before relying on a LISA towards your purchase. Most schemes have a purchase price scale. For example, the Moneybox LISA scheme is only eligible for first-time buyers to use if you are purchasing a property under £450,000.00, and the account needs to be open at least 12 months before you withdraw funds from it; otherwise, you will have a 25% cut to your savings.
Although Help to Buy ISAs are no longer available to new savers, existing account holders may still be able to use their savings and claim the government bonus, subject to the relevant rules.
Other schemes, including Shared Ownership and First Homes, may also be available to eligible buyers.
Government schemes and their eligibility requirements can change, so always check the current rules before making financial decisions.
2. Get your mortgage agreement in principle
Once you have an idea of your budget, speaking to a mortgage adviser or lender can help you understand how much you may be able to borrow.
A Mortgage in Principle or Decision in Principle can give you an indication of how much a lender may be prepared to lend.
It can also help you focus your property search on homes that are realistically within your budget.
Remember, however, that an Agreement in Principle is not a formal mortgage offer. The lender will usually carry out further checks and a valuation before formally approving the mortgage.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is another cost that buyers need to consider.
First-time buyers may qualify for First-Time Buyers' Relief, subject to the applicable rules and purchase price. The current rule is no stamp duty fees below the purchase price threshold of £300,000.00. It is important to check if you qualify as a first-time buyer to claim relief, for example, if you have inherited a share in a property, although you have not directly purchased a home. Under these circumstances, relief may not apply to you. This also applies if you own any properties outside of the UK.
Another situation where you are not eligible for first-time buyer SDLT relief under HMRC's rules is where you yourself are a first-time buyer, but you are purchasing with someone else who has owned a property before, either directly or through inheriting one.
As the SDLT rules and thresholds can change, it is important to check the current position when you are ready to purchase.
Your conveyancer will normally calculate the SDLT due on your purchase and, where required, deal with submitting the SDLT return and making the payment on your behalf. Therefore, it is important to be honest with your conveyancer and ask your own questions to ensure they are submitting the correct details to HMRC.
First-Time Buyer Checklist
Before you start your home-buying journey, make sure you've considered:
- Deposit
- Mortgage affordability
- Agreement in Principle
- Solicitor/conveyancer's fees
- Searches
- Survey
- Land Registry fees
- Stamp Duty Land Tax
- Mortgage fees
- Buildings insurance
- Removal costs
- Furniture and appliances
- Council Tax and household bills
- Service charges
- Ground rent, where applicable
- Estate or management charges
- Potential major works
- Ongoing maintenance costs
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