First Time Buyer - How To Buy Your First Home

Learn how to buy your first home and get your first mortgage. Explore our guides and use our calculators to find out how much you can borrow and how much deposit you need. Calculate if Help to Buy and first time buyer government schemes can help you get on the property ladder.

How to buy your first home

The key to buying your first home is plenty of research and preparation.

The individual steps to buying your first home are quite easy if you know about them before you start. It is the hidden steps or unexpected surprises that can turn homebuying into a stressful mess that drags on for months or years.

These are the 7 most important steps when buying your first home:

  1. Work out what you can really afford
  2. Research where you really want to live
  3. Get your finances in order
  4. Gather all the documents you need
  5. Start the process of getting a mortgage
  6. How long it takes to buy a house
  7. Get the best price on your new home

To learn more, explore our complete guide on how to buy a house.

Work out what you can really afford

The first step in buying your first home is to be brutally realistic about what you can afford.

The maximum mortgage you can get is around 5 times your income. Or 5 times your joint income if you're buying a house with someone else. Use a mortgage calculator to get an estimate of what you may be able to borrow.

Except in rare circumstances, you will need to save up a deposit of at least 5% of the house price. The average deposit for first time buyers in the UK is around 15% of the house price.

The typical time for a first time buyer to save up a deposit is between 8 and 10 years, depending on how expensive house prices are in your area.

Do the maths. Be honest about how much you can save every month, and whether your salary will change over the next few years. Unless you family that can support you financially or you've received a large inheritance, buying a house will likely take years, not months.

Don't forget stamp duty and other fees

Mortgage repayments are usually cheaper than rent payments for a similar property. This is one of the main reasons for buying a house instead of renting.

But there are lots of extra fees and taxes when buying and owning a house. Stamp duty, mortgage fees and survey fees are all unavoidable costs that will need to come out of your savings, reducing the size of your deposit.

Think about what you'll need to buy at IKEA after you move in too!

Help to Buy and first time buyer schemes

The Help to Buy schemes, also known as Equity Loan, Shared Ownership and Help to Buy ISA, are government schemes to help first time home buyers get onto the property ladder.

Equity Loan helps you buy a property with a smaller deposit.

Shared Ownership lets you buy a percentage share of a property, rather than the whole thing. This can help you get on the property ladder with a smaller deposit and a lower income.

Help to Buy ISA gives you a 25% bonus on your savings. The maximum bonus is £3,000, which you would get if you put £12,000 into a Help to Buy ISA. Free money!

Get a mortgage agreement in principle

Just before you really start thinking about where you want to live, get a mortgage agreement in principle (AIP).

An AIP is a document from a mortgage lender that says, in theory, how much they would be willing to lend you to buy a house.

You can get an AIP (sometimes known as a decision in principle, DIP) online in a few minutes. You will need to provide accurate data on your income, expenses and debts.

Many estate agents won't take you seriously without an AIP.

An AIP, plus your deposit, gives you a good indicator of how much house you can afford to buy.

Research where you really want to live

There are just two main factors when deciding where you should live:

What can you afford?

After you've worked out how much you can spend on your first home, use a website like Zoopla to find some places that are within your price range.

If you want to live in the south of England, there are relatively few areas that are affordable for first time buyers.

Elsewhere in the UK, where house prices are more reasonable, you will have a lot more choice on where you can live.

Research a few different areas and create a short list of where you'd really like to live.

What compromises are you willing to make?

As a first time buyer, you will likely have to make a couple of big compromises when picking your first home.

Decide what you really, really need in your first home. Which of these do you need, and which are you willing to compromise on?

  • Commute distance
  • Near a good school
  • Close to family and friends
  • Private garden

Remember that some compromises can be remedied in the future, while others cannot. You might be able to build an extension or put in a new kitchen if your financial situation improves. But you can't magically change the school catchment area or shorten your commute distance (unless you change jobs!)

Get your finances in order

The most difficult thing when buying your first home is sorting out your finances.

If you cannot save up a big enough deposit, you will not be able to get a mortgage.

If your credit score is poor, you will not be able to get a competitive interest rate on your mortgage.

If your salary is not big enough, you will not be able to borrow enough money for the house you want to buy.

Now you need really focus and get your finances in order. This is the hardest and longest bit of buying your first home.

  • Check your credit score, and improve if if necessary
  • Create a savings plan, and stick to it
  • If you need to increase your income to afford the house you want, plan it all out and get going!

Gather all the documents you need

To get a mortgage and buy your first home, you will need to gather up a large number of documents.

It can take some time to get your docs organised, so it's wise to do it sooner rather than later.

These documents are mostly for the mortgage lender. They need you to prove your identity, your income, and your monthly outgoings before they can lend you money.

A mortgage broker or financial adviser may also want to see these documents.

You may need to provide the original versions of these documents. Printouts or scans might not be accepted.

Here is a list of documents that you will likely need to buy your first home:

  • Proof of income (usually bank statements for the last 6 months)
  • Proof of identity (passport, driving licence)
  • Proof of benefits (if applicable)
  • P60 if you're employed
  • Tax return form SA302 if you're self employed or have more than one job
  • Two or three years of accounts if you're self employed

Start the process of getting a mortgage

At some point, probably while looking at properties, you should start talking to a mortgage broker or financial adviser.

If you use a mortgage broker, look for one that is "whole of market" and doesn't charge you a fee for their services.

You can also go directly to a mortgage lender (such as a high street bank). They will only talk to you about their own mortgages.

A mortgage broker can easily compare almost all of the mortgages available to first time buyers, and find the one that is best for your financial situation.

How long it actually takes to buy a house

If you've sorted out your finances, the full process of buying a house and moving in takes at least 2 months. It can take up to a year if there are complications.

Here are the main steps to buying your first home, and how long they take:

  1. Find a house and get your offer accepted - Between 2 weeks and 26 weeks

    This can be very quick if everything goes to plan, or it can really drag on if you're struggling to find good properties in the area you want to live.

  2. Get a mortgage offer - Between 2 weeks and 4 weeks

    After you've had your offer accepted, you need to finalise your mortgage. This is usually straightforward, but it can take some time to gather all the necessary documents. Learn more about how long it takes to get a mortgage.

  3. Conveyancy and exchange - Between 4 weeks and 12 weeks

    The legal work to transfer ownership of your new home, known as conveyancy, can be quite quick if there are no complications. Or it can really drag on if your solicitor goes on holiday or other issues pop up. The legal process is generally faster for a freehold property than a leasehold.

  4. Completion and move in! - Between 0 weeks and 4 weeks

    It's possible to exchange and complete on the same day, which means you can move in instantly. Or sometimes it can take up to a month. This is something you can discuss with your solicitor.

Get the best price on your new home

Before you put in an offer for a house, take the time to research sold house prices in the same area. Zoopla is a good tool for this.

You can also look into how "hot" the housing market is in your area. If houses are taking a long time to sell, sellers are more likely to accept a lower offer.

Brush up on your negotiation skills. Remember that both the seller and the agent (if there is one) usually want to get the highest price possible. Do your own research. Don't just listen to the agent.

It's usually better to start with a lower offer and then increase your offer in increments, unless it's a highly competitive market or very desirable property.

And finally...

Good luck! And let us know if you use this guide and successfully buy a house. We'd love to hear from you.

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Last updated: 22 August, 2019