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First-Time Buyers’ Guide to the Essentials


Looking to buy your first house? Our essentials guide will provide all the information you need to know.

Buying a house is back in fashion. After years of declining home ownership, recent months have seen the number of first-time buyers finally start heading in the right direction. A series of initiatives have made it easier to get a foot on the property ladder, but if you’re buying a home the process can still be intimidating.

From negotiating a price to arranging a mortgage and sorting out insurance, there’s a lot to take into consideration. That’s why we’ve distilled it down into a handy guide.

Is now a Good Time to Buy?

Times have been tough for first-time-buyers stretching all the way back to 2008. Mortgages have become difficult to source, wages have been stuck in the doldrums and house prices have risen. Fortunately, recent government initiatives have shifted the outlook into a more positive context.

The Help-to-Buy Scheme and the abolition of stamp duty for first-time-buyers has given people a leg up onto the property ladder. In January, the Telegraph reported that the number of first-time-buyers reached a ten-year high despite the average deposit rising by more than 90% over the same period.

There is a sense that now is a good time to enter the property market, while help is available and before prices rise any more.

Getting a Mortgage

First thing’s first, you need to work out if you can afford it. With deposits averaging around £30,000 across the UK – and far higher in London – banks are becoming a little kinder in their mortgage terms but think carefully.

A lower deposit will mean you have more to pay off and will be forking out significantly more each month. Decide if this is something you can afford or if you’re better off renting. Don’t stretch yourself to buy a house simply because you’re worried the housing market will continue to rise.

Before you apply you may need to improve your chances. If your credit history isn’t great you may struggle to get a deal. View your credit score via an agency such as Experian to see where you stand. If things look bad, don’t worry. If you are sensible with your money and regularly repay bills, you can repair your credit score quickly, but it may be worth stepping back a few years to secure a better deal.

Next, you need to think about the best type of mortgage. There are all sorts to choose from, and they can be quite confusing. Here’s a quick rundown of the basic types:

  • Variable Rate: The interest will change as interest rates do. The amount you pay will rise or fall depending on the direction of interest rates.
  • Fixed Rate: As the name suggests, fixed-rate products work on a single interest rate. No matter where rates move in the future, yours will stay the same. It provides the reassurance of knowing how much you’ll be paying but you might lose out if interest rates fall.
  • Flexible: A flexible rate mortgage offers flexibility in the monthly payments – perfect to protect you in case your circumstances change.
  • Offset: Use your savings account to offset your payments. You’ll only pay interest on the mortgage minus your savings balance.
  • Capped Rate: This caps the rate you pay at a certain amount. So, if interest rates rise faster than expected, you’ll still be protected.
  • Discounted Rate: This will offer a discount for a set period but be careful; the rate can jump sharply once you’re beyond the initial introductory period.
  • Stepped Rate: These are making a comeback and are aimed at first-time buyers. They offer tiered interest which means starting with a low rate and steadily increasing it each year. For example, you might start with 2% in the first year, rising to 3% in the second and so on. Lenders are introducing stepped products to entice first-time buyers into the market.
  • Cash Back: A cashback mortgage will tempt you with a cash lump sum in return for taking out the mortgage. It’s a good option for first-time buyers and might allow you to use the sum to cover other costs.

Many of these mortgage structures are designed to get you through the door. Cashback mortgages, for example, catch your eye with a wad of money. However, the overall amount you pay could be higher.

It’s important you understand the terms of each structure and the actual amount you’ll be paying in interest, fees and other costs before you decide.

Last but not least, it’s important to remember how a mortgage is secured. Your home may be at risk if you fail to make repayments. Check the terms and conditions to see what happens if you run into trouble.

Negotiating a Price

The difficult part comes when negotiating a price. First-time buyers are often so keen to get on the property ladder that they jump at a deal when they could have got the property for much less. At the same time, you don’t want to miss out by making an offer which is below the going rate.

Start by looking at the market. Sellers have a key advantage in that demand is outstripping supply, so they will often feel they can hold out for a higher price. However, trends vary from place to place so have a look around the neighbourhood and see what houses are going for.

Think about how long the property has been on the market. If it’s been a while, they may be struggling to sell the property and might be open to a lower bid. It’s all about weighing up the pros and cons and seeing how much bargaining power you have.

Arranging Insurance

This next part could be an entire article in itself, so we’ll just cover the basics here. Once you have bought the house you will need to insure it. There are various price points depending on how much you want to insure. You may wish to cover your boiler, your possessions in and outside the house and items in your garden. Make sure you understand how much your policy covers to ensure you’re not in for a nasty surprise when you make a claim.

All in all now is a great time if you’re a first-time buyer. The Government provides support to help you get started and banks are keen to secure your custom. Even so, it pays to have an expert on your side who can help you find a provider and secure the best deal for your requirements as well as navigate an unfamiliar process.

If you’re a first-time buyer and would like advice and support with the process, contact our team at Vintage Wealth Management today.