Our 10 top tips for First Time Buyers

Getting on the property ladder is often an exciting time for first time buyers but the process usually comes with stress and uncertainty, especially if you’re unfamiliar with the process.

Buying a first home has also been made more difficult since the Bank of England Base Rate rose from 0.25% in early 2022 to 3.5% in December 2022; this being the highest this rate since October 2008, and interest rates are unfortunately still high due to the Bank of England’s efforts to return inflation to 2%.

Good news though, as some lenders have started cutting their interest rates with some rates below 4%.

With this in mind, we thought we’d share our 10 top tips for first time buyers (although most of these will also apply to existing homeowners). As the property market is highly competitive, it is important to put yourself in the best possible position before starting the homebuying process.

1. Start saving a deposit – In most cases you will need at least a 5% deposit and ideally 10%. Saving more money will give you a greater choice in the mortgage market and make your application more attractive to lenders. A bigger deposit will reduce your mortgage interest rates as mortgages are calculated according to their loan-to-value ratio (LTV). One way to boost your deposit is to open a Lifetime ISA. A Lifetime ISA allows you to save up to £4,000 a year with the government adding a 25% bonus annually. 
2. Check your credit score – Your credit rating affects whether your mortgage application is successful and influences how much you can borrow. This is why it is important to start improving your credit score as soon as you can as it is a slow process. You can request your report from credit referencing agencies (Experian, Equifax and TransUnion).
3. Speak to a financial advisor/ mortgage broker – They will advise you on mortgage types, mortgage terms and new mortgage products to find you the best possible deal. Certain lenders offer dedicated first time buyer mortgage packages which may include additional incentives such as cash back, waived fees or free valuations.
4. Check how the government can help – The government appreciates that buying your first home is difficult and has introduced a number of schemes aimed solely to help first time buyers including Lifetime ISAs, Help to Buy Equity Loans, mortgage guarantee schemes, right to buy and right to acquire and shared ownership.
5. Think about what sort of property best suits you – Buying an older existing property might have character but you might need money to modernise or improve its energy performance. You might instead opt for a new build property but you should be aware of possible maintenance charges and delays in making the property habitable. Another option is buying a leasehold property but bear in mind additional yearly costs like ground rent and service charges.
6. Look for properties with potential to add value – Not all properties can be easily improved or extended. Some extension projects can be undertaken without the need for planning permission (permitted development rights) but your property might be located in a conservation area with tougher planning restrictions, you might need consent from third parties (i.e. developers) or there might be a party (shared) wall to consider. Renovations and extensions will of course cost you money but can represent an attractive long-term investment for you and your family as staying put will save estate agent and legal fees, removal costs and Stamp Duty Land Tax (SDLT).
7. Visit the property at least twice before making an offer – You’ll probably spend about 30 minutes viewing the property before thinking about making an offer which is not very long considering a house purchase is likely to be the biggest investment of your life. The property might look different during the day and night, there might be lots of noise pollution during certain times of the day, or you might struggle for parking during morning and afternoon school runs.

Perhaps take a close family or friend with you even if you are buying with someone else. They might spot things you haven’t and can help you to focus on what you really want from a property.

8. Use a reliable local estate agent – Independent estate agents are likely to have a better knowledge of the area so can find the most suitable properties for you to view which will save you a lot of time and effort. They will also be able to give you valuable advice on the current market.
9. Use a reliable local law firm – Once your offer has been accepted, make sure you have a solicitor or conveyancer ready to assist you with the process. Although you don’t necessarily need to use a local firm, we would recommend this as the solicitor/ conveyancer will have better local knowledge of the area you are buying in. They will likely be more readily available to update you and reassure any concerns that you may have along the way.

Bearing in mind that the estate agent may have a referral agreement with the solicitor/ conveyancer they are recommending to you which involves the solicitor/ conveyancer paying an instruction fee per referral. You may wish to check if the estate agent is receiving a referral fee as an incentive to recommend the solicitor/ conveyancer.

REMEMBER: The cheapest quote does not always equate to the best service. Biscoes offer competitive prices and pride ourselves on Great Service Every Client Every Time. If you’d like to see how we can help you buy your first time, please contact us on 02392 660261 or via our website www.biscoes-law.co.uk.

10. Don’t forget about one-off expenses – The main ones to look out for are:

• SDLT – first time buyers benefit from exemptions meaning they can buy a property up to the value of £500,000 before paying SDLT. You can check the SDLT you need to pay on HMRC’s SDLT Calculator here.
• Mortgage arrangement fees (also referred to as lender administrative costs, product fee, booking fee or application fee) – Most mortgage transactions will have at least one fee so make sure you factor this into your budget.
• Survey – the cost of a survey depends on what type of survey you commission, the value of the property and its location. You could expect fees anywhere between £400 and £1,500 (or higher).
• Legal fees – why not us our fees estimate generator as a guide for conveyancing fees – Conveyancing Quote - Biscoes Solicitors (biscoes-law.co.uk).
• Removal costs
• Decorating expenses
• Furniture

If you need help purchasing your first home contact Biscoes today on 0800 413 463 and we will be happy to help.

20 February 2023