Simple steps to help you to plan to buy your first home
1. Get your finances in order
Review your monthly income and expenses: Create a budget to work out how much you can realistically save each month.
Check your credit score: A good credit score improves your chances of securing a mortgage on better terms or rates of interest
Clear outstanding debts: Reducing debts can make you more attractive to mortgage lenders
Cancel unnecessary subscriptions: Reducing monthly outgoings will improve the health of your bank statements before you apply for a mortgage
2. Save for a Deposit
This is the hard bit and yet the most important one, you will have to save money on shopping, eating out and holidays to buy your home sooner. You will need to spend less and save more to get there.
Most lenders require at least a 5-10% deposit, but having a larger deposit (e.g. 20%) improves your mortgage options, and how much you can borrow. So with the average UK Home costing £300k that means a minimum deposit of £15,000 and ideally £30,000 to £60,000 that you have to save.
Consider using savings schemes (e.g., Lifetime ISAs in the UK) that offer bonuses or incentives for first-time buyers.
Reduce unnecessary expenses and look for ways to boost your income like side hustles.
Look at new apps like Klink who can make saving for your deposit easier and more fun too.
3. Research Your Mortgage Options
First-time buyer schemes: Look into government initiatives such as Help to Buy, Shared Ownership, or First Home schemes.
Mortgage in principle: Get a lender’s pre-approval to understand how much you can borrow.
Compare mortgage deals: Focus on interest rates, fees, and repayment terms. Check out new aggregators who specialise in this area like Mojo where you can compare multiple options saving you time. Or if you’re new to the market you may want to speak to an independent mortgage advisor to guide you through your first house purchase and mortgage.
Look at new providers like Perenna who offer lifetime mortgages, so you may be able borrow more at rates fixed for longer.
4. Set a Realistic Budget
Calculate ALL costs – Make sure you include mortgage repayments, stamp duty, home insurance, legal fees and your likely household bills (energy, water etc).
Budget for upfront costs – Costs like stamp duty, surveyor fees, and moving expenses.
5. Search in your budget
Do your research – Set prices on Rightmove or Zoopla to find properties within your budget and you’ll quickly get a feel for the market
Look for properties within your budget in up-and-coming areas where prices might go up – use tools like sold prices on Zoopla to check what actual sold prices are in your target area – they may be lower or higher than the asking prices.
Consider flats or smaller houses – they may as a stepping stone to your dream home as you get on the property ladder and can trade up in a few years time.
Look outside your ideal area – you may find a better priced flat or house outside your ideal location, and if its commutable this might work better for your budget.
6. Explore Alternatives
Shared Ownership
You could buy a share of a property and pay rent on the rest.
Buying off-plan
Purchasing a new-build property before completion can sometimes cost less or they may offer to pay your stamp duty.
Rent-to-Buy schemes
These allow you to rent with the option to purchase later. Explore new apps like Keyzy who offer new options in the rent to buy space.
Summary
It’s possible to realise your dream of home ownership. To get into the best position, sort your finances upfront and start to save for your deposit. It pays to put as much time into researching your mortgage options as you do into finding your ideal home. Be flexible when it comes to location and using new apps and providers to help you get onto the property ladder sooner.
This information is intended for editorial purposes only and not intended as a recommendation or financial advice