Buying your first home is an exciting milestone, but it can also feel overwhelming. From saving for a deposit to understanding affordability and navigating the costs involved, there’s a lot to consider. Thats why having a mortgage broker on your side can make all the difference. In this guide, we will walk you through everything you need to know as a first-time buyer in the UK.
1. How Much Deposit Do You Need?
One of the biggest hurdles for first-time buyers is saving for a deposit. In the UK, most lenders require at least a 5% deposit of the property’s value. However, a 10% or 15% deposit can unlock better mortgage rates, saving you money in the long run.
For example:
- £150,000 property – 5% deposit = £7,500
- £250,000 property – 10% deposit = £25,000
If you’re struggling to save, there are government schemes available, such as Deposit Unlock (allowing 5% deposits on new-builds) or Shared Ownership, which lets you buy a portion of a property and pay rent on the rest. Some lenders even offer 0% deposit or £5000 deposit schemes.
2. How Lenders Assess Affordability
Your deposit is only one part of the equation – lenders also assess affordability to ensure you can keep up with mortgage repayments. They look at:
- Income (salary, bonuses, self-employment earnings)
- Outgoings (bills, loans, credit commitments)
- Credit score (a higher score can improve your mortgage options) typically, lenders offer mortgages up to 4.5 to 5 times your annual income. However, this can vary based on your circumstances and the lender’s criteria.
3. The Costs of Buying a Home
Beyond your deposit, there are other costs to budget for, including:
- Stamp Duty – First-time buyers don’t pay Stamp Duty on properties up to ££425,000 (in England & Northern Ireland). If the property is between £425,000 and £625,000, you’ll pay 5% on the portion above £425,000. Note this is due to change from the 1st April.
- Solicitor Fees – Typically £1500 – £2,500, covering legal work and property searches.
- Mortgage Fees – Some lenders charge arrangement fees, but a broker can help you find fee-free deals.
- Survey Costs – Basic valuations are often free, but detailed surveys range from £300 to £1,500.
- Moving Costs – Hiring a removal company can add a few hundred pounds to your budget.
4. The Importance of Using a Mortgage Broker
Navigating the mortgage market can be complex, and that’s where a mortgage broker comes in. Here’s how they help first-time buyers:
- Access to Exclusive Deals – Some mortgages aren’t available directly to the public. A broker can find these for you.
- Expert Advice – They assess your financial situation and recommend the most suitable mortgage for your needs.
- Time-Saving – Instead of researching every lender yourself, a broker does the legwork.
- Application Support – They guide you through paperwork and liaise with lenders to speed up approval.
Most importantly, a mortgage advisor works in your best interests, ensuring you get the right mortgage at a great rate!
Final Thoughts
Buying your first home is a big step, but with the right preparation and expert guidance, it can be a smooth journey. Start by saving for a deposit, understanding your affordability, and budgeting for the extra costs involved. And when it comes to finding the right mortgage, a broker can be your biggest asset.
If you’re ready to take your first step on the property ladder, get in touch today – we’ll guide you through the process and help you find the right mortgage deal for your circumstances.
