Searching for a property as a first-time home buyer can be just as confusing as it is exciting. Luckily, to make things easier, there’s a standard process you can expect all home purchases to follow.
In this short guide, we’ll walk you through the four things all first-time homebuyers need to know:
Ready? Let’s start.
If you’ve never owned a home, chances are you’ll qualify as a first-time buyer.
However, there are a few scenarios where you won’t be treated as a first-time buyer, even if you’ve never purchased a property before.
You won’t be eligible for first-time buyer status if:
For most people, saving up a deposit is the most challenging part of getting onto the property ladder. The good news is, as a first-time buyer, you’ll have access to benefits and schemes that many other buyers don’t.
Shared ownership schemes. This is where you buy a portion of a property and pay rent on the remaining share, usually to a developer or local housing authority. That means you only need a mortgage to cover the share that’s yours. It could help you get a better rate, by lowering the LTV. But remember, you’ll still need to be able to afford the rent on top of the mortgage repayment.
Help to Buy Equity Loans (Wales only). If you’re looking to buy a new build home, a Help to Buy Equity Loan could help. You’ll still need a 5% deposit but, with this scheme, the government will offer you a loan of up to 20% of the value of the property. A conventional mortgage will then cover the remaining 75%. The best bit? The government’s equity loan is interest-free for the first 5 years, meaning it could be cheaper than a conventional 95% mortgage in the long run.
There’s also a government-backed mortgage guarantee scheme available until December 2023.
First-time buyers can use it to secure 95% mortgages, even if banks aren’t formally offering them.
It might be useful to get a mortgage in principle (MIP) before you make an offer. An MIP is a certificate from a bank or mortgage broker showing how much you can borrow. It can help you make a stronger offer, because it shows you can actually borrow the amount you’re offering.
When applying for your MIP, lenders will ask for:
While this might sound slightly intimidating, don’t worry too much. Most lenders want to work with first-time buyers and will be happy to help you get your MIP.
It’s always best to get your MIP before any viewings, just in case you see your dream home and want to move quickly.
You can also apply for MIPs from more than one lender at a time – it’s a good way to compare the rates they’re willing to offer you.
This is where it starts to get exciting: searching for your new home. Armed with your MIP, you now know how much you can afford, and you can show sellers that you’re a serious buyer.
You can kick off your property search online using sites like Rightmove and Zoopla.
It’s also worth having a chat with estate agents local to the area you’re looking at. If you tell them your criteria (3 bedrooms, parking, under £350,000), they can give you a call whenever new relevant listings come up – sometimes before they go on the market.
So, you’ve seen your dream home: what next?
You’ll need to contact the estate agent and tell them you’d like to place an offer on the property, and at what price. They’ll ask the seller if they’re happy to accept. They might not always accept your first offer, and there might be a bit of back and forth and negotiating.
If they do accept, you can move forwards with the next couple of steps: conducting a survey and conveyancing.
Before you sign on any dotted lines, you’ll need to have a property survey done. This will tell you if there are any problems with the property – missing roof tiles, old heating systems, damp, that kind of thing.
Find a local RICS certified surveyor, and arrange a survey. There are different levels of survey you can choose from, with the most popular being the RICS HomeBuyers Report.
Your survey will highlight any potential issues and how serious they are, with advice on how to handle them. For example, if the survey mentions a damp patch on a wall, your surveyor can explain whether this is cause for concern or not.
Most surveyors charge between £300 and £600, and you’ll receive a detailed report with everything you need to know about your prospective home.
Learn more about home buyers surveys here.
The next step is to have your mortgage officially approved.
At this stage, your lender is looking to confirm your ability to reliably pay your mortgage each month. They’ll do this by measuring you against their eligibility criteria. Every lender is different, but they’ll often look at the following:
They’ll also conduct their own survey of the property to make sure it’s worth what you’re going to pay for it.
You may need to pay a booking fee to the lender to confirm your mortgage, which can cost anywhere from £100 - £1,000, depending on the lender and the mortgage you choose.
Surprise! There are stacks of paperwork involved when you’re buying a home. Thankfully, you won’t need to handle all of it yourself – your conveyancer or solicitor will walk you through the process.
A conveyancer is someone who specialises in conveyancing – the legal process of transferring a property from the old owner to the new owner. Most conveyancers charge between £1,000 and £1,500.
Your conveyancer will work with the seller’s solicitor to make sure everything goes to plan.
They’ll also run searches on the property to check everything is in order. For example, reviewing if any past building work had planning permission and confirming what buildings or land are included in your purchase.
At the end of the conveyancing process, you’ll exchange and sign the contract to prove that you’re the new legal owner of the home you’re buying. And when that’s done, you can pick up your keys and move into your new home!
You can learn more about the conveyancing process here.
Buying a home for the first time can be exciting and daunting in equal measure – but remember, you don’t have to go it alone.
You can work with a mortgage broker, like Habito, from the outset. We can find and recommend the best deal that matches your needs, circumstances, and eligibility. And, as a “whole of market” broker, we have access to virtually every mortgage option in the UK, sometimes even ones you won’t get from the bank directly.
If you’re eyeing up that first rung on the property ladder, start by chatting with Habito. Our friendly mortgage experts are ready to help – and it’s totally free! Get started here.
The lowdown on getting a mortgage and buying a home when you're self-employed.
Thinking of buying your first home but not sure where to start? Here’s a simple, step-by-step guide to the process – from sorting your finances, to viewing properties, to getting the keys to your new home.
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