With no experience of buying a home, getting on the property ladder can be a daunting prospect for any first time buyer. Our top tips can help prepare you meaning you can focus on the excitement of owning your first home!
Saving for the deposit is the greatest hurdle for most first time buyers. The larger deposit you have the lower your mortgage will be and more mortgage deals will be available to you.
Most mortgage lenders will require you to have a deposit of at least 5% of the purchase price.
We would always recommend you speak to an expert about the best option for you.
Help to Buy ISAs
These were launched in 2016 to help first time buyers save towards the deposit for their first home. Applications to open new Help to Buy ISAs are now closed, however those who have an existing ISA are able to continue to save in the account until November 2029.
Provided you have at least £1,600 in the account when it is closed, the government will pay a bonus of 25% of the amount in your account, up to a maximum bonus of £3,000. As your solicitor, we will apply for the bonus after exchange of contracts and prior to completion, but you may withdraw the monies prior to exchange and use them for the deposit payable to your seller.
The bonus is only available for properties with a purchase price of up to £250,000 and only if you are buying with a mortgage. The Help to Buy ISAs apply to each first time buyer, so if you are buying with a partner or friend and neither of you have owned a property before, you can both have a separate Help to Buy ISA.
There are other schemes available to you, including:
Lifetime ISAs were launched in April 2017 for those under the age of 40. Users of the scheme can open a Lifetime ISA and pay in up to £4,000 throughout each tax year, and can continue to make contributions up to the age of 50. The government will also add a 25% bonus to these contributions, meaning that those who save the maximum will receive a £1,000 bonus each year from the government.
This bonus can be used towards the purchase of a property and from 6 April 2018, funds (including any bonus) can be withdrawn from a Lifetime ISA to be used towards a first time residential purchase, subject to certain conditions.
Forces Help to Buy
If you are serving in the military, Forces Help to Buy allows you to borrow up to 50% of your salary and any recruitment and retention pay (formerly Specialist Pay) up to a maximum of £25,000. It is an interest free advance of salary and is to be repaid over ten years.
Other Government Help to Buy schemes
Help to Buy Equity Loan
This scheme is available for the purchase of newly built properties whether you are a first time buyer or a buyer moving home, and is available for properties with a purchase price up to £600,000. The Government will lend you 20% of the cost of your newly built home so you just need a 5% cash deposit and a 75% mortgage. The Help to Buy Equity Loan changed on 1st April 2021, and is now only open for first time buyers.
Buying a property through shared ownership means that you buy a share of your home, between 25% and 75%, and then pay rent on the remaining share. You can buy further shares later if you wish. The property is normally owned by a local housing association and the rent is calculated as up to 3% of the association’s share of the property’s value.
As a buyer, you would need a relatively small deposit compared to if you were buying 100% of the property. Shared ownership properties are always leasehold, so the landlord will be responsible for insurance and maintenance; for which there will be service charges to cover the cost.
What other property costs will there be?
As your conveyancer, we will carry out a Local Search, Drainage Search and Environmental Search on your behalf, the cost of which are usually around £250, which must be paid prior to conducting the searches. Other searches may also be necessary depending upon the location of your property.
The Local Search relates only to the property itself and will not reveal any planning applications for any other land in the area. If you are buying a property opposite an open area of land and wish to know if there are any planning applications in the vicinity of the property, you can request your conveyancer carry out a Plansearch.
Stamp Duty Land Tax (SDLT)
As a first time buyer you are not required to pay SDLT on properties up to £300,000. If the property is worth between £300,000 and £500,000, the first £300,000 will be taxed at 0% and the remainder taxed at 5%.
Land Registration Fees
These are fees charged by the Government for changing the Land Registry records to show that you are the legal owner of the property and to register your mortgage. The fees will vary depending on the purchase price of the property.
Research mortgage deals
With so many mortgages deals out there it can be hard to understand all the deals available to you and to ascertain which would be best for you. A mortgage broker could help you understand your options, although this will add to your total costs. Comparison sites can also help you understand the deals in the market and what differentiates them from their competitors, however we would always recommend speaking to an expert.
Be aware of different surveys
We do not have responsibility for building and structural advice or guidance, as this is done by a surveyor, who will help you identify any issues or damage that you may not have noticed. Should your inspection of the property reveal major problems affecting the value we would recommend that you obtain quotes for the works specified as it may be possible for you to renegotiate the price, which can be done up to exchange of contracts, or request that the seller carry out remedial work before you proceed.
Most surveyors provide three types of survey;
Rics condition report
This is the most basic survey you can get, giving an overview of the property’s condition and highlighting significant issues, but it does not go into detail. It uses a traffic light rating for the condition of different parts of the property.
Rics HomeBuyer's report
This is more detailed than a condition report and highlights particular problems, such as damp and subsidence. It includes advice on necessary repairs and ongoing maintenance and points out anything that doesn’t meet current building regulations.
Rics building survey
The most thorough survey you can get, this survey provides a comprehensive analysis of the structure and condition of the property, listing defects and advice on repairs and maintenance in full.
While the HomeBuyer’s report tends to be the most popular, there are no particular rules about the type of survey you should get, as this will depend on the type and age of your property.
None of the surveys above will cover elements such as central heating systems, wiring or plumbing, so we would recommend you carry out further independent checks of areas such as gas and electrics.
Planning for the future
If you are moving in with a friend or partner and you are not married, there are ways you can secure and safeguard your assets if things do not work out. Ask us about transfer deeds, cohabitation agreements and declaration of trusts, and don’t forget the importance of having a Will in place.
What will we do as your conveyancer?
Our role is to look into the legal aspects of your house purchase. This will include checking items such as:
- Appropriate planning permissions and building regulations
- The seller is the legal owner entitled to sell the property
- Boundary responsibilities
- Any legally binding obligations which might impact your future plans to expand or alter the property
We will keep you updated every step of the way, leaving you reassured that your matter is in good hands.
You can discuss your next move with our teams by contacting us on the phone numbers below, or to find out more about our fees you can use our estimate calculator.
Fareham: 01329 288121
Southampton: 023 8063 9311
Portsmouth: 023 9275 3575
Chandler’s Ford: 023 8071 7467
Waterlooville: 023 9277 6569