Getting on the property ladder: Your options as a first-time buyer

Owning your own home is a popular life milestone. But it can be tricky figuring out just how to get on the property ladder in the first place – especially when 52% of prospective first-time buyers struggle with all the financial jargon such as Help to Buy equity loans and shared ownership. Here, we break down some of the ways you can get onto the property ladder…

Sort out your finances

The trick to sorting out your finances is to get your head out of the sand and dive right in! It’s way less daunting than you think and can even reduce stress and give you peace of mind. Becoming a homeowner is one of the most expensive things in life for many people – but it’s certainly not out of reach…even if you have a small budget.

Sorting out your finances means you’ll have a clear vision of what you can afford and how much your mortgage payments will cost every month. Make a note of your regular income and, if applicable, your partner’s. Then work out how much you can comfortably afford to pay per month on your mortgage, taking into account bills, council tax, food and any other essentials. Don’t forget to account for all the extra fees that come with buying a house, such as Stamp Duty Land Tax (STLD), deposits, surveyor’s fees and so on.

Save, save, save

Most mortgages require you to pay at least a 20% deposit, which is a lot of money. A Help to Buy ISA could be the way forward to saving up for your dream home. This is where the government offers first-time buyers a bonus on their savings every month. For example, if you save £200 per month, the government will add £50 per month as a bonus. The minimum amount you need to have saved to claim the bonus is £1,600, taking your total to £2,000. You can claim up to £3,000 in bonuses from the government scheme. All you have to do is instruct a solicitor to apply for the bonus on your behalf, which will be done at the time between exchange and completion. The bonus will be a contribution towards the balance you’ve already saved up to complete you purchase. This can be a fantastic boost for your savings and you could be on the property ladder earlier than you think.

Shared ownership

An alternative way to get on the property ladder is shared home ownership. A lot of housing developers offer shared ownership – so you’re never far away from the scheme! You buy a share of 25 – 75% of your home and pay a reduced rent on the rest of the share. It’s a very affordable alternative because you’ll pay a much lower deposit too. If you want to own a larger percentage of your home, you can buy shares any time…a method called ‘staircasing.’ It’s highly recommended for low to moderate income households because it’s only available to household incomes of £60,000 or less.

Equity Loan

Slightly different to share ownership, shared equity is where you buy your home with a minimum of a 5% deposit, a 75% mortgage and a 20% equity loan. You won’t pay any equity loan fees for the first five years, giving you a chance to put some money aside to pay it off. An equity loan gives you a bit more control over your home compared to shared ownership, but if you don’t keep up with mortgage and equity loan repayments, your house can be repossessed.

Don’t fall for something out of your budget

This may be glaringly obvious, but it’s so easy to fall into this trap. When you’re searching for your first home, you’re more than likely to come across several ‘dream homes’ just out of your price range. Don’t fall for this – in the long-run it isn’t worth it because there’s a high chance you’ll find another home perfect for you and your budget. After all, good things take time!

Call in the experts

Buying your first home can be a little overwhelming with all this complicated jargon and numerous costs. That’s why it’s well worth it to get expert advice to help you do everything properly and save money on fees. Use a mortgage advisor to find out how much you can afford and a solicitor to do all the legal legwork. Make sure you instruct a good conveyancer to deal with the completion of your house purchase – the most important part of the process buying a your own home!

Got a question about moving house? Speak to our specialist conveyancers using the button below:

Talk to us