How to Buy a House UK First Time?

There is so much to learn about how to buy a house UK first time before you should even start with your home buying process to avoid the common pitfalls and save yourself from having extra costs.

As you look forward to purchasing a house, you should also consider knowing and understanding the costs that come with buying one such as how much deposit you should have ready as well as the other fees that you need to pay for. 

It is also important to be aware of the types of mortgages that are available for home buyers and the help that you may get from the government.

Having a checklist of what you want from a house is not the only thing that you should possess, but also doing some research about the neighbourhood that you are eyeing is also of essence.

How Much Deposit Do You Need?

deposit for buying a house

If you are ready to buy a house in the UK, then you should also be ready to have money to use for deposit. The required percentage for deposit is from 5% to 15%, but if you have more than it will be much better. To illustrate this amount, for example a £200,000 property, 5% would be £10,000; 10% would cost £20,000 and a 15% deposit would amount to £30,000.

Having more than the required deposit is always worth it because it has several advantages.

Some reasons for this are your monthly repayments would be lower, you have more chances of getting better deals in your mortgages as lenders may offer lower interest rates, you get a higher chance for approval, and you may have a higher budget for buying because lenders may just offer you a higher loan.

Having a bigger deposit would also seem a lesser risk for you because you get a bigger share of the equity which would make you less likely to suffer from experiencing negative equity.

Be aware that mortgage rates are always changing so be prepared for this as well as other fees that may suddenly come up. 

What Other Costs Should You Watch Out For

first time buying a house

Part of knowing how to buy a house in UK for the first time also means having a list of all the other factors that would cost you some fees thus the need to properly budget so you can always be prepared for any cost that may come up along the way.

The total cost for all these other expenses may range from £1,330 to £6,140.

Some fees that you need to prepare for are mortgage fees and other charges which can be up to £1,500; valuation fee may cost up to £700; property survey fees is around £400 to £1,500; removal fee is from £50 to £1,500; and conveyancing costs range from £780 to £940.

About half of the mortgages have arrangement costs to set up the loan and it amounts to £100 to £1,500. And if you want to check the property for structural issues and other problems, there is also a fee involved for property survey and other costs that you may encounter are fees for money transfer, land registry which is from £90 to £140, local searches for anything that may affect your home buying negatively, stamp duty fees, leasehold fees, etc.

In case there are fees that you cannot pay upfront, it can be added to your loan but you will end up paying more.

Different Types of Mortgages

mortages to buy a house

Before proceeding to apply for a mortgage, it is best to know what options you have to ensure that you choose the right one that works perfectly for you. There are many types of mortgages available and these are:

  • Repayment mortgage – this is perhaps one that we usually know about. This kind of mortgage is about making a payment on a monthly basis and it comes with an interest. With repayment, you get to pay off your loan when your mortgage term ends.

  • Fixed- rate mortgage – you get a guarantee from the lender that your interest rates will be fixed for a certain period of time which can be from 1 to 10-year period. 

  • Discounted rate mortgage – after a particular time, you get to have a discount on the standard variable rate set by the lender.

  • Interest – only mortgage – with this mortgage, you are only paying for your interests and not really the mortgage itself so you only pay a small amount every month but your loan remains intact.

  • Cashback mortgage – the lender pays you a lump sum with a value of around £500 to £1,000 after you sign- up for the mortgage.

  • Offset mortgage – it is another method of using your savings to lessen the interest in your mortgage.

  • SVR or Standard Variable Rate mortgage – is the standard interest rate offered by the lender without any deals or whatsoever. 

  • Flexible mortgage – offers flexibility in the sense that you can underpay or overpay or take a holiday payment. Downside for this is that interest rates are high.

  • Capped Rate mortgage – variable mortgages are available but with a cap on how high the interest rate can go.

  • Tracker mortgage – allows you to pay variable amounts to your lender monthly.

Can You Get Help from the Government?

The government has a Help to Buy program wherein they offer an equity loan to both first time home buyers and the existing ones. The agreement is that the purchase price cannot go beyond £600,000 and you are allowed to make a loan of 20%of the purchase price without any interest for the first 5 years. This also can only be applied if you have a minimum of 5% deposit. For those who live in London, they can loan up to 40% of the purchase rate.

Stamp Duty Land Tax

Buying a land or property in the UK comes with a tax and the rate is based on where you are purchasing your property. For the main residence, the rate is from 0% to 12% while 3% to 15% for additional properties.

Where to search for a house?

Before getting excited on your house hunting, first know where to look for one. You may check out property search sites like for-sale.com, Zoopla, Home.co.uk, etc., or ask your local estate agent. Do not forget to look around the neighbourhood before making an offer!