Moneyzine
/Mortgage Guides/First-Time Buyer's Guide

First-Time Buyers Guide: A Beginner's Handbook

Buying your first home is one of the cheeriest of occasions – but it can also be daunting and complicated. Here, we simplify the process.
Idil Woodall
Author: 
Idil Woodall
Sharon Bahravi
Editor: 
Sharon Bahravi
11 mins
November 10th, 2023
Advertising Disclosure

It’s getting harder than ever for first-time buyers to get on the property ladder. The average house in the UK currently costs around nine times the average earnings – the last time the picture was this grim was in 1876, nearly 150 years ago.

We’ll start off by saying that there isn’t a magic formula that can make buying a house suddenly more affordable: you just need more money.

Understanding the process of buying a home, though, can help you figure out whether you can or want to stretch yourself to get on the ladder for the time being. It can also save you an awful lot of time and money when the right time comes.

The aim of this guide is just that – get you prepared and steeled.

1. Save for a deposit

Unless you have a suitcase full of cash, you are likely to borrow some money from a bank or building society to buy a home. Mortgages are a two-way street – you give your bank some, and your bank gives you some.

Can you afford to buy a home?

Whether you can afford to buy a home boils down to two main things:

  1. Are you able to raise a big enough deposit?

  2. Will your earnings, outgoings, and spending habits allow you to borrow enough?

When deciding how much money you will raise for a deposit, remember that there are many other expenses involved in buying a house that you have to budget for – most notably stamp duty, which can be substantial depending on the property, and hefty solicitor fees.

The greater your deposit, the cheaper your mortgage will be

The deposit is the lump sum you bring to the party.

The bigger your deposit is;

  • The smaller the amount you need to borrow from a bank,

  • The cheaper your monthly mortgage repayments,

  • The more of the property you own from the outset.

Your monthly repayments will depend on the type of mortgage you will go for – but it will most likely include the following;

  • Capital repayment: the fundamental sum you borrowed from your lender,

  • Interest: the money you pay your lender for borrowing from them. So if you borrowed £100,000 with an interest rate of 2%, you will pay £2,000 in interest.

What is LTV?
Many other costs of buying a house

2. Find out how much you can borrow

Before browsing Zoopla or ping any estate agents, it may make sense to have a rough idea of how much you can borrow to buy a home. The amount a mortgage provider will lend you depends on various things, most notably:

  • The size of your deposit, as we discussed above,

  • Your income,

  • Your outings,

  • And your credit score.

If it’s a joint mortgage, your lender will take their finances into account as well.

The rough rule of thumb is that you can borrow about four to four and a half times your pre-tax salary – although this varies depending on the lender. Some lenders may be willing to stretch to five times your salary as long as it’s affordable.

How your bank is judging you

3. Get a mortgage in principle

You raised your deposit and found out how much you can borrow. It’s time to take your numbers for a test ride.

An agreement in principle (AIP) is a certificate from a lender to say that, in principle, they would be happy to lend you a certain amount.

Applying for an AIP is different than applying for a mortgage. For an AIP, you’ll typically need to provide the following:

  • Your full name

  • Your date of birth

  • Three years of address history

  • Your income and expenditure.

Without the supporting documents, this information alone should be enough to obtain an AIP. But for your actual mortgage application, you will need to provide supporting documents.

You don’t have to have an AIP, but it sure does help your chances of getting a mortgage. While it’s no guarantee, it can at least reassure you about whether you can or how much you can borrow. This can also help your research as you browse through properties. Ensure you get an AIP before you approach an estate agent, as they often want to ensure you can get a mortgage before you offer.

Don’t apply for too many AIPs, and remember that it doesn’t guarantee anything

4. Scout the area & register with real estate agents

Now, it’s (hopefully) the fun part: scrolling the likes of Zoopla and Rightmove till the end of days and exploring the areas you wish to make your new home.

Area scouting is especially important if you are considering something you haven’t lived in before. Discover the area to check out the commute, supermarket or corner shops, restaurants, chippy shops, and the overall atmosphere. It’s also worth visiting there for a night or two to get a feeling of what it’s like after the sun goes down.

You can consider the following whilst deciding on a postcode:

  • Transport – how close is the nearest train station? Is the motorway easily accessible?

  • Flood zones – Using this service, you can check whether it’s near a flood zone.

  • Crime levels – Check how safe the area is using the crime map on Police.uk.

Once you agree on an area(s), register with the local real estate agents to increase your chances of finding your next home. Often, estate agents contact prospective buyers before they list a property online.

Visit the properties in person

5. Make an offer

Making an offer is a tricky business. While it’s relatively common to offer below the asking price, you may need to offer the asking price or more if it’s a particularly hot market or there are other people interested.

You can determine how much a property would be worth by browsing similar homes on the likes of Zoopla or the Land Registry and how much they were sold for.

Once you decide how much you’d like to offer, contact your estate agent – just to be on the safe side, put it in writing by sending them an email. And finally, hope that the sellers will accept your offer.

Your offer may be accepted, but sellers may still pull out – and you may be gazumped
Some tips on making an offer on a house:

6. Apply for a mortgage

And now the most important, albeit not the cheeriest bit, starts (at least at the beginning) – applying for a mortgage sequel: for real this time.

A mortgage is likely to be the most important financial outlay for the next 25 to 30 years of your life. You need to be wise about it – and luckily for you, there are many options to choose from. Unluckily for you, it’s not always easy to choose.

A mortgage broker can help you navigate the market, but regardless, you’ll need to understand what you are applying for yourself.

How much you’ll pay for a mortgage from the get-go and in the upcoming months will depend on what type of mortgage you are going for. To rehash your memory, these are what mortgage repayments consist of:

  • Capital repayments (the actual loan),

  • Interest,

  • Arrangement fees (fees you pay to your lender to set up the mortgage)

  • The length of its term.

The term refers to the period you are given to repay your mortgage. The standard term is 25 years, although it’s not uncommon to see terms as long as 40 years now. Using a mortgage calculator, you can see how much your monthly repayments will cost with varying interest rates and amounts.

Balancing your monthly payments

7. Hire a conveyancer or solicitor

  • Necessity: Required

  • Cost: £1,000 - £1,500

After sellers accept your offer, speak to a conveyancer or solicitor before you pop the bubbly.

Conveyancing is an obligatory legal process that takes place before you can officially buy the property. It includes carrying out searches around the house, drawing up and reviewing the contracts, dealing with the Land Registry and paying any stamp duty, if applicable.

You can either opt for a conveyancer who specialises in property but may not be a solicitor or an actual solicitor with experience in property law. Having a solicitor at your beck and call will save you time and frustration. A personal recommendation would be ideal, but you can also visit the Law Society’s list of conveyancers.

Remember that your solicitor or conveyancer doesn’t have to be local – if you buy in an expensive location like London, you’ll probably find a more affordable one elsewhere.

When should I hire a conveyancer?
What are the associated costs?

8. Book a survey

  • Necessity: Optional

  • Cost: £300 - £1,000

Besides the property valuation survey your mortgage lender runs, you can also book an independent building survey. This is optional but highly recommended – if you put your (potentially) whole life’s savings into a floor and four walls, you need to ensure it won’t fall down on you.

Surveys help you assess the property's condition; structural problems, damps, rot, rats, leaky pipes, or anything that can and will be a nuisance for you soon.

It can also help you negotiate a lower price or ask the seller to fix any outstanding problems beforehand. Finally, put some time into researching what kind of survey you’d like to go for, and make sure that it’s worth it for the type of property you are going for. The Royal Institution of Chartered Surveyors is a great way to start.

Do I need a house survey?

9. Get a home insurance

  • Necessity: Optional, but may be required

  • Cost: £300 per annum, on average

It is imperative that you do your home insurance, and you do it quickly. You are legally bound to the property you buy the moment after you exchange contracts – who is there to say it won’t burn down the day before you move in? Some mortgage lenders may even make this a condition of lending.

Your estate agent may suggest you an insurance provider – but you are likely to find better deals elsewhere. Much like mortgage brokers, don’t be bullied into opting for their partners, and do your own research.

10. Exchange contracts – and voila!

Almost there! All that’s left is for your and the seller’s legal representatives to swap signed contracts. The sale becomes legally binding at this point, and you’ll have to pay your deposit.

On the completion day, you can pick up your keys – don’t forget to take a picture of this massive milestone!

And there, you have it. You can now take a relaxing breath, pop that bubbly you’ve been saving, and head to IKEA (or maybe Home Bargains) to start decorating.

Frequently Asked Questions About Buying a Home

Do first-time buyers pay stamp duty?
What is the best age to buy a house in the UK?
Who qualifies as a first-time buyer UK?

Related Content

  • April is a new player in the UK mortgage market. It’s unique as it offers Dutch-style mortgages. This means you can get longer fixed terms and interest rates that automatically decrease over time.
    March 12th, 2024
  • Dutch-Style Mortgages: How Do They Work?
    Dutch-style mortgages landed in the UK in February 2024 with the launch of April Mortgages. These new mortgages could save you money on interest, along with a host of other benefits.
    March 12th, 2024
  • Best Places to Buy and Rent Out Holiday Homes: Statistics to Help You Decide
    If you're in the market for a holiday home that you can rent out, there are several countries that might be worth considering. We compiled a list based on popularity with tourists, but we didn’t forget property prices and rental yield.
    October 18th, 2024
  • The best time to buy a house depends on what you’re after. If a low price is your priority, then winter would be the best time. If you want to have more options, you’ll want to strike in spring or summer.
    November 10th, 2023
  • If you’re a student hoping to get your foot on the property ladder, a mortgage is typically your best choice. In this article, we’ll go through the conditions you need to satisfy to get one, different types of student mortgages, and some common questions.
    November 10th, 2023

Contributors

Idil Woodall
Idil is a writer with interests ranging from arts and politics to history and finance. She spent several years in publishing before becoming a full-time writer, and learning the inner workings of an industry she loved ignited her interest in economics. As an English graduate, she cultivated valuable research and storytelling abilities that she now applies to make complex matters accessible and understandable to many. When she’s not writing, she can be found climbing or watching a movie.
Sharon Bahravi
Sharon Bahravi has been a developmental and managing editor since 2010 and helps authors through various stages of their manuscripts and blogs. An entrepreneur, educator, speaker, and fitness trainer, she has written on a range of subjects and heads up the Language Analyst team for Pluralytics. Sharon loves horses, music, poetry, and coffee - not necessarily in that order.