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First Time Buyers Guide img

The soaring price of property in the UK has made it increasingly difficult for first time buyers to get on the property ladder. If you’re in this situation, you’re definitely not alone; more than half the working population cannot afford to buy a home. That’s hardly surprising, bearing in mind the average house price stands at about £197,000 and the average wage stands at around only £25,000. For the traditional mortgage calculation of three to four times your earnings, the maths simply does not add up. On these pages you will find advice on the process from raising funds to being able to move into that illusive first home.


Raising the Funds

Before even looking at any houses, you need to find out how much you can borrow. It would be pointless (and downright depressing) to fall in love with a property, only to find out that you can’t afford it. Approach some of the more reputable lenders and get a feel for how much they are prepared to lend you. You can then tailor your property viewing on and around those figures. It would also be advisable to get an “agreement in principle” to confirm the amount that a lender is prepared to loan you, as this will increase your power of leverage when you’re ready to put in an offer on a property.

The amount that a bank or building society is prepared to lend you will depend on how much you earn and on the size of the deposit you are putting down. Terms will vary quite considerably between different lenders but they will normally be prepared to lend you between three and five times your salary. If you are buying with a partner, it normally gets a bit more complicated but a rough rule of thumb is about two and a half times your joint income.

What is particularly important here, is that you actually have some sort of deposit as mortgages of 90% and above are usually more expensive, due to the lender levying an extra charge called a Mortgage Indemnity Guarantee (MIG). This is also known as an HLC (Higher Lending Charge) and can be around 1.6% of your loan. It is justified as the lender’s way of compensating themselves for the extra risk on their part. The good news is that not all lenders make this charge, so watch out for it! For more advice on mortgages see our mortgage section. 


If this all sounds a bit daunting, don’t be unduly disheartened; there are some plusses to being a first time buyer:


image Interest rates are still extremely low and could well be going down again in the near future. 
image Many mortgage lenders are competing for your custom. Not being part of a chain, you will be more appealing to the vendor, as a quick sale could be a distinct possibility. 
image If you buy a new build, many builders have first time buyer incentives, such as putting down a 5% deposit on your behalf.
image As a first time buyer, you are needed to keep the market moving.


Another aspect you can look into when thinking about how much you can afford to borrow, is that of a rental income. If you are going to have a spare room, you could rent it out to a lodger (tax free up to £4,250). This is particularly significant because some lenders will factor this into the mortgage affordability equation. It doesn’t sound like a lot but it might just be that extra little bit that you need to get on the property ladder.


Other Costs


Once you have had your offer accepted and your mortgage approved, there are other costs to be borne. Stamp duty is payable if the property costs £120,000 or more. It is payable on the following graded scale;

Purchase Price (£)
Stamp Duty Payable (%)
Above 500,000

You will also have to pay for a valuation of the home you intend to buy on behalf of the lender. This will cost you about £150. If you then decide to have a survey done in addition to the valuation, this will cost you more. A homebuyer’s survey is advisable and will cost you around £350, dependent on the value of the house. A full structural survey will be necessary if there is suspicion of a structural defects or if the property is particularly old and/or unusual. A full structural survey will cost around £500 upwards, but if you’re a first time buyer you should be staying well clear of this sort of property anyway. Note that the valuation cost is included in both types of survey.

Other costs incurred when you make your purchase will include:


image Conveyancing – a hefty figure of around £400-£500 for your solicitor to put your name on the deeds.
image Telegraphic transfer – the charge for the lender transferring the money to your solicitor, normally around £25-35.
image Mortgage arrangement fee - (often called a product fee) - this is normally somewhere in the region of £500.
image Home insurance – your lender will insist that you take out insurance to protect their investment, starts at around £15 per month (watch out for insurance penalties imposed by certain lenders for not taking out the insurance with them!).
image Life assurance – also compulsory so that the mortgage is paid in the event of your death, starts at around £30 per month.

image Moving costs – the magnitude of which can vary wildly depending on whether you do it yourself (a few hundred) or get the professionals in (£1000 upwards).

Thanks to the new government’s HIP (Home Information Pack) scheme, as the buyer, you no longer have to pay for land searches and land registry costs. This will save you around £200-£300. As part of the HIP you will also get an EPC (Energy Performance Certificate). This is a rating of how energy efficient your new house is. It is given a rating from A through to G for both energy efficiency and environmental impact (Carbon Dioxide emissions); “A” being the most efficient. This is all well and good, but if you’re buying and old house don’t read too much into it, bearing in mind that an old house is unlikely to have insulation in the walls and under the floors!

Help Available for. first time buyers

New Build Properties

Recent years have not been particularly kind to building companies, particularly in the demand for new-build flats. This may be one reason why they are particularly welcoming of first time buyers, offering great incentives such as paying your deposit or even your mortgage for a limited time. Other deals may include free carpets and curtains throughout, saving hundreds of pounds. What is particularly attractive about a new-build is the fact that it will be ready to move into with new bathroom, fitted kitchen and little maintenance needed. Deals will depend on your personal circumstances and will vary dramatically depending on who you are talking to, and when. At the time of writing (January 2008) Bryant, Persimmon and Barratt Homes seem to be offering the best deals for first timers. Also, Redrow have an “affordable” housing range called “Debut” which may be worth a look. These are one to two bedroom flats that start at around £60,000, depending on where you want to live.

Conventional Shared Ownership 

This is only available to Housing Association (or Registered Social Landlord) tenants. This scheme allows you to buy a share in the house (around 25-30%) whilst renting the remaining percentage from the Housing Association. After a year, you then have the option of buying further shares in the property at current market value.

Do-It-Yourself Shared Ownership

This is similar to conventional shared ownership but you get to pick a property off the open market and buy it on shared ownership terms with a local housing association. Like conventional shared ownership, you take out a mortgage for the percentage that you own and pay rent on the part that you don’t.


This National scheme assists the first time buyer by funding 25% of the house price through a housing association. The buyer takes out a mortgage for the remaining 75% and the housing association will not recover its 25% share in the house until it is resold.

Key Worker Homebuy

This scheme applies to key workers such as doctors, nurses and teachers, allowing them to get a foothold on the open property market in London. The scheme covers property less than 90 minutes travelling time from work, up to a value of £210,000 and includes an equity loan of £50,000.

Eligibility for Home Ownership Schemes

Each scheme will have a different priority lists which will vary from one local authority to another. The best advice is to contact them to see if you are eligible, but you can use the following standards as a rough guideline of qualification:


image Residency in the borough for a minimum of 2 years.

image Minimum household income of £17,000, maximum income of £42,000 (£50,000 for a couple).

image Possession of a European Union or British passport, or permanent resident status for other passport holders


logo Money


  • Affordability is the major consideration when choosing a mortgage.

  • Typically most high street lenders will lend a single person between 3 and 3.5 times their pre-tax salary.

  • Other credit commitments, such as to a credit card or personal loan will generally not be taken into account.

  • Some lenders will also allow you to add a proportion of any regular bonuses you receive to this base figure.

  • Read More >>>









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Direct link to Information 

image Raising the funds 
image Other Costs 
image Help for first time buyers 
image New Build Properties
image Conventional Shared Ownership
image Do-It-Yourself Shared Ownership
image Homebuy
image Key Worker Homebuy
image Eligibility for Home Ownership Schemes


Useful Links for First Time Buyers

a site dedicated to first time buyers
for information on first time buyer mortgages 
another site dedicated to first time buyers. 
for information on the governments First-Time Buyers Initiative



More Information

Use the following links to found out more about
home ownership schemes in your area: 

image direct.gov -

lists contact details for local authorities.

image housingcorp.gov-

describes homebuy scheme in more detail.

image england.shelter.org -

more information on home ownership schemes. 

image communities.gov -

information on government housing strategies


(Images courtesy of emurphy.ie 




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