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First Time Buyer Advice

Buying a property is one of the most important purchases you will make and buying a property for the first time will be an even more daunting prospect.

Add to this the vast array of mortgage products available from a wide range of sources and you could be left with a stressful, confusing decision.To help you make the right decision we have put together our 10 TOP TIPS for you:

Ensure that you are realistic when working out exactly how much you can afford to spend on your new property. You should ensure the intended mortgage is affordable (by doing a budget calculation) and it is wise to seek a Decision in Principle certificate, so that you know how much you can offer once you have found a suitable property. Even a newly built property will require some sort of furnishings, whereas older properties may require extensive work, such as re-flooring, tiling or renewing the wiring. Make sure that you factor in all these likely expenses, in addition to the purchase price, and other fees such as conveyancing and stamp duty.

  • When buying for the first time, there may be a number of details in the properties you are looking at, which you may not pick up. Always take an experienced buyer, such as one of your parents, or a home-owning friend, when looking at property. If this is difficult to arrange, then make sure you at least get some assistance once you have selected a property you like and are arranging a second viewing.
  • If you have been used to living at home with your parents, remember to budget for expenses such as council tax, gas and electricity bills, boiler servicing, and other home repairs.
  • Make sure you know what the likely council tax charge will be in your new property. The selling agent should be able to tell you what tax band the property you are interested in buying is in, and how the charges are levied by your local authority.
  • Even if you do not have children, remember that property in the catchment area of good local schools will always be much easier to sell on. However, this may also be reflected in a higher purchase price.
  • Always consider how your transport arrangements will change in your new property. If you have a car, your insurance premium may increase dramatically if you move from a town with relatively low crime into a city centre with higher crime rates or if you move from your parents’ house with a locked garage to a smaller terraced house with on-street parking.
  • Consider the availability of public transport services, making sure you find out local bus routes, the frequency of train services from your nearest station, and, if you are moving a long distance, the range of flights available from your local airport. Even if you drive everywhere, this information will be useful for anyone coming to visit you who does not drive.
  • Write down a list of local amenities which are important to you. This may include shops, restaurants, pubs, sports centres, parks, and cinemas. If you enjoy activities such as walking, or cycling, the neighbourhood you plan to move in to may be very different to the one your parents are living in, and may not have the same access to parks and other recreational facilities. Before making any final decision about where to move to, take a stroll or bike ride around the local area, and note down where the key facilities are.
  • If you are a heavy internet user, check to see that broadband or other high speed internet is available in the street you are moving into. The selling agent should be able to tell you this.
  • Try, where possible, to find somewhere to live that is close to your main place of work. Commuting can be one of the biggest household expenses, and as you are likely to be spending much more time on domestic chores and/or DIY, living somewhere which minimises your commuting distance will be very important. If property is more expensive nearer to your place of work, make sure you weigh up this additional expense, when compared to the costs and time of commuting. You may wish to ask colleagues in your workplace to see if there are possibilities to lift share with anyone from the area

Help to Buy Phase 1

The Key Facts

The Help to Buy equity loan scheme has been a huge success, the scheme gives buyers with small deposits the chance to get onto the housing ladder.

How does the scheme work?

The scheme can be accessed by all, not just first-time buyers, but applicants must not have another property and cannot take out loans on an interest-only basis or rent out a Help to Buy property.

To buy a house using the scheme borrowers contribute a deposit worth 5% of the property’s value while the government provides a loan equivalent to 20%. The remaining 75% is obtained from a traditional mortgage lender.

This means that a buyer with a £10,000 deposit could access finance which enables them to purchase a house worth £200,000 under the scheme.

The government loan is interest-free for the first five years and borrowers will be charged a fee of 1.75% each year, this figure will rise in line with the Retail Prices Index each year after this.

These fees only count towards the Government loan and come on top of the mortgage repayments.  Borrowers must pay back the equity loan when they sell the home or at the end of the mortgage period, which ever comes first.

Available on properties worth up to £600,000.

Help to Buy Phase 2

The Key Facts

The second phase government’s Help to Buy scheme is available to both first time buyers and existing home owners buying New Build or 2nd hand residential (older properties).

The scheme allows borrowers with a deposit of as little as 5% access to mortgages with some of the UK’s biggest lenders, while the lender will be able to buy a guarantee from the Government covering up to 15% of the value of the property.

This will make it less risky for lenders to offer a mortgage to a borrower with only a 5% deposit and should enable them to offer cheaper rates.

Help to Buy loans are available on all properties worth up to £600,000.

Stephen Noakes, mortgage director at Lloyds Banking Group, said the scheme would open up the mortgage market to borrowers unable to raise a large deposit.

“This scheme will help first-time buyers and homemovers who can afford a mortgage but until now, have struggled to raise the necessary deposit. Through the scheme, these products will make mortgages more accessible – providing a genuine solution for those who have not been able to get on, or move up, the ladder.”

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