First-time buyer tips

If you’ve decided you’d like to own your own home, there are a few things you can do to make the process easier. From saving for a deposit to the mortgage application process, here are some MoneyFit tips to get you started.

How much deposit do I need to buy a house?

Before looking at properties you need to save for a deposit. 

Generally, you need to try to save at least 5% to 20% of the cost of the home you would like. For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500. Saving more than 5% will give you access to a wider range of cheaper mortgages available on the market. Use our GoalSaver to see how close you are.

Budget for the other costs of buying a home

Apart from your monthly mortgage payments, there are other costs associated with buying a home. These include:

more than the deposit

Don't forget all the other costs you'll have to pay, even before you get to buy the furniture. Find out how Megan managed when she recently bought her flat. Watch Megan's video to find out more.

First-time-buyers will pay no Stamp Duty on the first £300,000 for properties worth up to £500,000.

See Estimate your buying and moving costs.

Make sure you can afford your monthly repayments

As a first-time home buyer, the most important thing to bear in mind is whether you can really afford to take this step. It's wise to put together a budget before you start looking for a property.

In the Armed Forces you will be able to get a fairly clear idea of how much your income might rise over the next few years (see What you can expect to earn) and you might decide to accept a small reduction in living standard now for the sake of owning your own place, in the knowledge that you are likely to catch up in a few years. Only you can decide where that balance lies.

There are now strict checks when you apply for a mortgage. Lenders will check that you can afford the mortgage and also 'stress test' your ability to make your payments if interest rates were to rise or if your circumstances changed, such as a planned retirement date or if you started a family.

As part of the mortgage application process you will need to show the lender evidence of any outgoings you have and prove your income. See How much can you afford to borrow?

Affordable home buyer schemes to get you on the property ladder

The Forces Help to Buy scheme (FHTB) offers an advance of salary of up to 50% (capped at £25,000) repayable over ten years. For more information see JSP 464, contact DBS Mil Pers (formerly SPVA) on (9)4560 3600 and ask for the FHTB Section or JPACEnquiryCentre@mod.uk

Several government-backed schemes aim to give home buyers a helping hand onto the property ladder. 

If you can use one of these schemes, lenders will still want to ensure that you can afford to pay your mortgage - see Affordable housing schemes.

Money fitness tip

See the Guidance Notes for applying for a mortgage so that you can be in the best possible position to be accepted for a mortgage.

Finding a mortgage

There are many different mortgage deals to pick from, so choosing the right one for you can be tricky. It can depend on a several things, so it's a good idea to do some research and talk to experts such as mortgage brokers. See Getting a mortgage for more information.

Freehold or leasehold

If you want to buy a house, it’s likely you’ll buy the freehold, meaning that you own the property and land it sits on. If you’re buying a flat, you'll be buying leasehold, or buying into a share of the freehold.

Find out more about buying a leasehold property on the Gov.uk website.

The mortgage application process

Whichever mortgage you apply for, your lender will want to know that you can continue to make your repayments even if interest rates rise or as a result of any planned events that would impact your financial circumstances. 

You'll need to provide evidence of your income, and provide information of your outgoings, including debts, household bills and other costs such as clothing, childcare and travel.

To prove your income, you may have to produce payslips and bank statements. If you're self-employed, you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.  

Someone else can guarantee your mortgage

If you’re struggling to get a mortgage to buy your first home you might want to consider a guarantor mortgage. This means that a parent, guardian or close relative agrees to be responsible for the mortgage if you can't.

Guarantor mortgages shouldn’t be entered into lightly. They're legally binding arrangements. Your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.

You’ll need to talk to a mortgage broker to find out more about which lenders offer guarantor mortgages.

Last reviewed: 10/04/2018

This content has been provided by the Money Advice Service