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Top 5 tips for first time buyers.

Buying your first home is perhaps the most expensive purchase you are ever going to make so you should consider all options, pros and cons and mainly your priority. So we have drawn up a top 5 tips, and tricks, how to find the right first home for you.

At the moment, house prices in the UK are being driven by the pandemic-prompted stamp duty holiday until June 2021 on the first £500,000 of a home's purchase price and until September 2021 on the first £250,000.

Mortgage rates will also likely be driven by the pandemic more than Brexit. The Bank of England dropped the base rate – its official borrowing rate – not once but twice in 2020 and it's now at its lowest rate in history, just 0.1%. There's also been some recent talk of the risk of negative interest rates, which is a possibility more than a probability.

The good news for first-time buyers is they have a head start when it comes to being “proceedable”. This is estate agent code for an attractive buyer who will go to the top of the pile if there are several pursuing the same property. The reason is first-time buyers are not in a chain, they don’t need to sell their current home before they can move. But to be fully proceedable, you should have your deposit ready to go and a mortgage approved in principle. With that sorted, you can start looking.

Here are our top 5 tips for fist time buyers.

1. Should you buy now?

It's not easy to answer this question. Most of the big guys who predicted the crash in 2020 included Bank of England, Savills, JLL. Based on Rightmove the prices are now at a record in all countries and regions of Britain with a figure of over £336,000. No one really knows what is going to happen to house prices over the next few years. Buyers should concentrate on whether buying is affordable and the right decision in the long-term, rather than panic over house prices or cave into the UK's 'must-own mentality. Keeping track of and understanding the property market is undoubtedly important when it comes to deciding whether now is a good time to buy or not. Even more important, though, is figuring out what is best for your personal needs and financial circumstances.

If the house you want is available now, you can afford it and you are buying it as a long-term investment, it may be better to take the plunge rather than wait for something that may or may not happen in the future.

2. Work out the true cost of buying.

It's not as easy as get a mortgage, grab the keys and you're in. Buying a home's almost guaranteed to cost more than you think. Here's what to look out for before buying a property. Mortgage arrangement fee Expect to pay your lender an arrangement fee. They vary but £1,000 is typical. In some cases, this is non-refundable, even if the purchase falls through. Legal fees Many lenders will contribute to legal fees, although in that case, you would have to use a solicitor approved by them. If you pay for your own conveyancing, you're looking at about £800-£1500, depending on the purchase price. Check the conveyancing quote. Stamp duty Buy a property for more than £125,000 and you normally have to pay stamp duty land tax on its purchase price (unless you're a first-time buyer when you pay zero stamp duty on the first £300,000 of any home costing up to £500,000). However, temporary changes mean many won't have to pay it until September 2021 (first £250,000). See Stamp Duty Calculator and guide. Surveys These are another costly aspect of any purchase, with a typical survey costing £400 to £700. Many people pay for surveys on purchases that fall through, so budget for two or three.

3. Boost your credit score.

Don't apply for mortgages before checking your credit files at the main agencies are error-free. Small mistakes can cause rejection. For example, active accounts registered to old/wrong addresses can hurt badly, so whip through your credit files and ensure any active account (even historic and unused) is registered at the correct address.

If you have a low credit rating, there are several things you can do to improve it:

  • Register on the electoral roll. If your name’s not on there, you’ll find it much harder to get credit. Go to the GOV.UK website to find out how to register to vote online.

  • Pay your bills on time. Paying a phone landline or internet contract on time is a great way to prove to lenders that you can manage your finances.

  • Check if you’re linked to another person. Having a spouse, friend or family member’s credit rating linked to yours through a joint account could affect your personal rating if they have a poor score.

  • Check for fraudulent activity. If something on your credit report is wrong or doesn’t apply to you, contact the credit reference agency to have your file updated. For example, if someone applied for credit in your name without your knowledge.

  • High levels of existing debt. Ideally, you should pay off any outstanding debt before applying for new credit. This is because banks, building societies and credit card companies might be hesitant about lending you more if you already have a lot of debt.

  • Moving home a lot. Lenders feel more comfortable if they see that you’ve lived at one address for a considerable period.

  • Keep your credit utilisation low. Your credit utilisation is how much of your available credit limit you use. If possible, try to keep your credit utilisation at 25% or lower.

4. Research, research, research.

Before you rush into anything, do your homework. Research is critical to know about the property market. Speaks to local estate agents, look at current properties for sale online, or which have just sold in your chosen area. Check the neighbourhood, during the day, weekend and night. Research the transport links, shops, amenities and mainly for your kids which schools are nearby and how they rank.

See the free house price valuation guide about what must be researched before you make an offer.

5. Make a wish list.

Before viewing any properties, make yourself a wish list of points that are most important to you in your first property. Therefore, after viewings, your decision will be based on logic and practicalities over emotions and feeling towards a property. Making a house-hunting wish list can be exciting as you think of all the details, features and rooms you would love to have. While making that list, it's important to know that you will have to make compromises.

It's useful to begin your house wish list with a "must-have" section. The most important elements are location, size and price.

For the "nice to have" part of your wish list, always keep in mind that there are many details you can improve and add yourself. Try not to get too hung up on the decor as old furniture or strange wallpaper. What you can't change is the location, neighbourhood or size of the rooms.

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