Buying a first home is a big life event. Making it happen takes planning money-wise. Review spending today to know you can handle a mortgage. Save up over time for the deposit needed and other housing costs.
You can check on loan options for which you can qualify. This sets expectations on what is affordable. If help is needed, many government schemes assist new buyers. They offer things like discounted prices, shared ownership or equity loans.
Know that mortgage payments last decades. Be sure your budget can handle possible rate increases down the road. Look at all the pieces of the puzzle before jumping in. Guide the process with care and vision. This sets up future success.
Check Your Financial Health
Getting set to buy a first home means looking closely at current finances. Check-in on key indicators to ensure you are ready.
First, get credit reports from Experian and Equifax. Good credit scores result in better mortgage rates offered. If your history is limited or your score is low, a personal loan can demonstrate responsibility. You can get 12 month loans for bad credit from direct lenders in the UK. Paying these back on time further boosts your profile for major borrowing later.
Also, tally all monthly income coming in versus expenses going out now. Confirm your steady cash flow exceeds costs by enough to support mortgage payments. Lenders examine debt-to-income proportions too:
- Total debt payments as a per cent of gross income
- Aim for this ratio to be below 36%
Lastly, save up over time before buying. Have 3-6 months of costs set aside in an emergency fund. This prepares for surprises that come up.
1. Save for the Deposit
The biggest hurdle to home buying is saving a deposit. Plan to set aside 5-20% of the target property’s price for this purpose. The rest comes from a mortgage. Some accounts give free extra deposit funds:
- Lifetime ISAs – Government adds 25% to yearly contributions up to £4,000
- Help to Buy ISAs – Closed, but existing holders get bonuses
First-time buyers typically save an average deposit of 21%, which translates to around £62,470 based on the average purchase price.
Use standing orders for automatic saving every month. Other tips:
- Start early and be consistent
- Save yearly bonuses and tax refunds
- Cut expenses to free up cash
- Earmark gifts directly for the deposit
If buying a home to also house your business, special loans can assist. You can contact direct lenders for this. Unsecured business loans from direct lenders need no collateral, so you will get the funds quickly after short applications. You can use these unsecured business loans for purchasing costs like the downpayment or pay for renovations to create your home office space after moving in. The quick access borrowing with flexible terms aids major personal and business investments like this.
Owning property becomes a reality with diligent saving over time. Track progress to motivate hitting deposit targets. Your home dreams can happen with focus.
| Region | Average Monthly Mortgage Payment for First-time Buyers (£) |
| London | 1,400 |
| South East | 1,000 |
| East of England | 950 |
| South West | 850 |
| East Midlands | 750 |
| West Midlands | 725 |
| North West | 675 |
| Yorkshire and The Humber | 650 |
| Wales | 600 |
| Scotland | 575 |
| North East | 550 |
Explore Mortgage Options
Mortgages have many complex options. Doing homework on the variants allows finding your best fit at the lowest costs. Consider:
1. Fixed-Rate Mortgages
These typically lock in a set interest rate of 1 to 5+ years. It provides certainty on payments due even if market rates rise later. You avoid downside risk but lose out if rates fall a lot during the fixed term.
2. Variable-Rate Mortgages
Here, the rate fluctuates based on an underlying benchmark, such as the Bank of England base rate. So, your payment adjusts up and down over time. More risk, but it can benefit from declines, too.
3. Tracker Mortgages
This links mortgage pricing directly to a market benchmark like the base rate. The difference or “tracker” above it is fixed. So again, it moves perfectly matched to the benchmark.
Understanding the scenarios, tradeoffs, and personal budget flexibility helps determine your preferred structure. Seek advice from an independent broker exploring options.
Get a Mortgage in Principle
Pre-approval with a Mortgage in Principle (MIP) should happen early when buying a home. This initial lender OK streamlines everything after. A MIP confirms you qualify for a realistic loan amount. Documents needed typically:
- Proof of income, like pay slips
- Recent bank statements
- Summary of debts
Benefits of having a MIP first:
- Shows sellers your seriousness and financial viability
- Enables firm offers backed by financing
- Narrows focus to affordable places only
- Saves wasted time touring homes far out of reach
- Speeds processes after finding the right fit
Work with a broker initially to get MIP estimates at the best rates. This sets expectations on purchase prices to shortlist in your search. Once a MIP is secured, focus efforts only on suitable homes. You can avoid discouragement and wasted efforts this way.
Explore Government Schemes
Buying a first home feels out of reach, but UK programs make it possible with support. Explore schemes open to you:
Help to Buy Equity Loan
This offers buyers a 20% equity loan from the government to shrink the mortgages required. Loans become due only upon the eventual sale of the property. Reduces current borrowing needs.
Shared Ownership
A portion of the property, like 25-75%, is purchased upfront by the buyer via mortgage or savings. The remaining part is rented from a housing association. Over time, the owned share can increase.
Right to Buy
This allows eligible council housing tenants to buy their property outright at a large discount off market value. Significant savings on achieving home ownership. Discounts range from 35-70% typically.
First Homes Scheme
Newly built homes are discounted by 30% for qualifying first-time buyers meeting regional income caps and other criteria. Significantly cuts costs.
Discuss which government programs provide the biggest affordability boost or payment relief in your situation.
Conclusion
Buying a first home takes planning and reviewing budget realities early on. Save up for costs that come with a purchase. Check the mortgage options you qualify for. This sets expectations for affordable places. If needed, use special programs for new buyers. They provide things like low prices, shared ownership or equity loans.
Know how mortgage payments last decades. Be sure you can handle future rate increases. Look at all aspects of money before jumping in. Guide with care at each step. This leads to future success. Excitement and worry come with big changes, but smart steps will get you there.