Home ownership is a major ambition for most of us, but it is a significant financial commitment and the home buying process can be a daunting one, especially when buying for the first time.

Our first-time buyer advice includes important steps and useful tips to make things a little simpler.

Questions first-time buyers should ask themselves
Before you start the search for your first property, consider the prospect of buying and owning a home from all angles.

  • Why do you want to buy a property?
  • Are you emotionally and financially ready?
  • Do you have a stable job that will support the financial commitment of buying and owning a home?
  • How much can you afford to buy?
  • What are the upfront costs of buying a home?
  • What are the ongoing maintenance costs?
  • If a window breaks or the roof needs replacing, will you have enough money to cover the repair work?
  • Should you buy now or would it be better to save a larger deposit?
  • What mortgages can you reasonably apply and qualify for?
  • What incentives are on offer for first-time buyers?
  • Where do you want to live?
  • What do you want in a neighbourhood? What type of property do you want to buy? New or resale?
  • Are you happy to remain a homeowner for the next few years?
  • Will buying a home fit your long-term plans?

Save for a deposit
Raising a deposit is a major part of the journey to home ownership. Here are some tips on how to save the cash.

Establish how much money you need to set aside for a deposit. The bigger your deposit, the more competitively-priced your mortgage is likely to be. It’s advisable to start saving as much as possible, as soon as possible. First-time buyers today need to save for a bigger deposit to secure a mortgage deal, according to recent findings. If you are able to live with your family while saving, this will often be cheaper than renting and allow you to save more each month.

A good way to save is to lock money into a regular savings account. You can secure competitive interest rates in exchange for not dipping into your cash. Some banks and building societies may require you to open a current account with them first.

Alternatively, you could try a more flexible account. An easy access account for example, allows you to pay in and withdraw money at any point but they tend not to offer such a high rate of interest.

If you are looking for a longer-term option for keeping your savings, then you may want to consider an Individual Savings Account - more commonly known as an ISA. ISAs are tax-free and although there is a limit as to how much you can put in, it is a really good way of saving.

For first time buyers, the government’s Help to Buy ISA will allow you £50 for every £200 saved for a deposit from this autumn. Each bank or building society offering the product will have its own interest rate. Help to Buy ISAs will be limited to £3,000 on £12,000 of savings.

Share the financial burden with someone else
If the prospect of buying a new home on your own is too daunting or not financially viable, then you may want to consider buying with someone else.

If you buy your first home jointly with a friend, partner or family member, you can top up the size of your deposit and therefore access a wider spread of mortgages.

You may also be able to boost your appeal as a purchaser if the person you are buying with has a good credit rating and larger income than you. Even if they don’t have a larger income, two incomes are beneficial as two can live as cheaply as one, but you will have twice the income for the mortgage, utility bills and other outgoings.

However, whether it’s your mum and dad, boyfriend, girlfriend or friend, it’s important to discuss freely and clearly your commitment to buying a property together, as it’s a big, long term obligation.

Optimise your chances of securing a mortgage
Most first-time buyers will need a mortgage to purchase a home. Our tips are here to improve your chances of agreeing a deal.

  • Make sure you have all your finances and paperwork in good order as lenders will want to know that you will be able to meet all your mortgage repayments. They will likely want to see evidence, such as proof of income and regular outgoings including household bills. This is particularly important if you are self-employed.
  • Clear any debts. Lenders will look more favourably on you if you don’t have any outstanding loans.
  • Lenders like to see that you are in long-term employment. If you are in a probationary period at work, it’s worth checking whether the lender will agree a mortgage before it ends.
  • Get a copy of your credit report to see how you can improve your credit rating. Reports are held by credit reference agencies such as Experian and show what lenders will see when they examine your mortgage application.
  • Consider securing a mortgage in principle. It outlines how much you are able to borrow within a specified timescale. A mortgage in principle is not a guarantee, however, it can reassure estate agents and sellers that you are serious about buying and that you have the finances in place to back up your offer.

Don’t forget the other buying costs
There are several other costs associated with buying your first home so remember to make room for them in your budget.

  • The lender might charge you for reserving and arranging your mortgage and for assessing the value of the property you plan to buy.
  • You may find that cheap mortgages are offset by expensive fees and costs. You will want to hire a chartered surveyor to carry out a study of the property you intend to buy and make sure that there are no major faults or issues. The mortgage lender will usually say that a survey is compulsory and is a requirement of offering you a mortgage.
  • It is highly recommended you instruct a solicitor to deal with the legal side of things. This will be an extra cost but is well worth the money if you choose the right solicitor.
  • Stamp Duty Land Tax, paid on property transacted over a particular threshold, is a major cost and varies depending on the value of your property.
  • Moving costs, such as the hiring of a removal firm.
  • Furnishing costs – this can be a significant part of buying your first home if you do not have any existing furniture. You will probably have to buy appliances too unless they are included in the sale – cooker, washing machine, fridge etc

Other tips
When looking for a property, build up a rapport with estate agents and stay in regular contact with them, so that you know as soon as your dream home comes onto the market. Also sign up for property alerts on property portals such as Rightmove, so that you are the first to hear about new homes for sale.

Try to keep a business-like attitude to buying a home. Remember to ask the important questions, rather than get carried away with ideas of how you could decorate it. Also take your own photos of the property – they’ll be handy to refer to later on.

Find out from the local council if there are any major projects planned for the area. Big-name developers moving into the area is a sign that it is improving and this can boost house prices. Recent research also shows that living close to a supermarket can boost house prices.

At PFK our friendly team is dedicated to providing an outstanding customer experience, from the first call through to completion. And our professional advisors are always happy to help and respond to queries no matter how large or small. Whatever it is we can help with, we’d love to hear from you.
Website link: http://www.pfk.co.uk/