First Time Buyer

A person is classified as a first-time buyer if they’re buying their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad.

You’ll need to save up to 5% or more of the purchase price as a deposit and borrow the rest of the money (the mortgage) from a lender such as a bank or building society.

The loan is ‘secured’ against the value of your home until it’s paid off. If you can’t keep up your repayments, the lender can repossess (take back) your home and sell it, so they get their money back.

How much deposit do I need to buy a home?

Before looking at properties, you need to save for a deposit.

Generally, you need to try to save at least 5% of the cost of the home you’d like to buy.

For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5%) for the deposit.

Saving more than 5% will give you access to a wider range of cheaper mortgages available on the market and a lower interest rate.

If you’re struggling to save a large enough deposit, there are some options available to you.

This includes a range of family assist mortgages. This is where whoever is supporting you puts a percentage of the money you’re looking to borrow into a specific savings account or secures the mortgage against a percentage of their own property.

Help for first time buyers

There are a range of schemes available to help first-time buyers to help you get on the housing ladder, particularly if you only have a small deposit.

Contact us for further advice.

Loan to Value

When talking about mortgages, you might hear people mentioning ‘Loan to Value’ or LTV.

This is simply the amount you’ve borrowed to buy your home (the loan) compared with the mortgage lender valuation of the property.

For example, if you buy a home for £200,000, put down £20,000 as a deposit and have a mortgage of £180,000 – your LTV is 90%. This is because the amount you’ve borrowed (£180,000) is 90% of the home’s value (£200,000).

The lower the LTV, the lower your interest rate is likely to be. This is because the lender takes less risk with a smaller loan.

The cheapest rates are typically available for people with a 40% deposit, which works out as 60% LTV.

Make sure you can afford your monthly repayments

As a first-time home buyer, the most important thing to bear in mind is whether you can really afford to take this step.

Budget for other costs of buying a home

Apart from your monthly mortgage payments, there are others costs when buying a home.

These include:

survey costs
solicitor or conveyancer fees (this often includes extra costs, such as search and Land Registry fees)
mortgage arrangement and valuation fees
removal and moving in costs
buildings insurance
initial furnishing and decorating costs
Stamp Duty (Land and Buildings Transaction Tax in Scotland, or Land Transaction Tax in Wales).

Finding a mortgage

North Star Mortgages & Financial Services Ltd know a lot about the mortgage market and can help you find the mortgage that best suits your needs.

Freehold or leasehold

If you want to buy a house, it’s likely you’ll buy the freehold. This means you own the property and the land it sits on.

If you’re buying a flat, you’ll be buying leasehold, or buying into a share of the freehold.

The mortgage application process

Applying for a mortgage can seem like a long and confusing process, with a lot of forms to fill out.

You’ll need to provide evidence of your income, credit commitments and spending. If you’re self-employed, you’ll need to provide tax returns and business accounts for the last two or three years.

Lenders will carry out what’s called an affordability assessment. This is a detailed look at your finances, which lenders use to work out if you can afford your long-term repayments.

NORTHSTAR

MORTGAGE & FINANCIAL SERVICES LTD

First Time Buyer

A person is classified as a first-time buyer if they’re buying their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad.

​

You’ll need to save up to 5% or more of the purchase price as a deposit and borrow the rest of the money (the mortgage) from a lender such as a bank or building society.

​

The loan is ‘secured’ against the value of your home until it’s paid off. If you can’t keep up your repayments, the lender can repossess (take back) your home and sell it, so they get their money back.

How much deposit do I need to buy a home?

Before looking at properties, you need to save for a deposit.

Generally, you need to try to save at least 5% of the cost of the home you’d like to buy.

For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5%) for the deposit.

​

Saving more than 5% will give you access to a wider range of cheaper mortgages available on the market and a lower interest rate.

​

If you’re struggling to save a large enough deposit, there are some options available to you.

​

This includes a range of family assist mortgages. This is where whoever is supporting you puts a percentage of the money you’re looking to borrow into a specific savings account or secures the mortgage against a percentage of their own property.

​

Help for first time buyers

There are a range of schemes available to help first-time buyers to help you get on the housing ladder, particularly if you only have a small deposit.

​

Contact us for further advice.

​

Loan to Value

When talking about mortgages, you might hear people mentioning ‘Loan to Value’ or LTV.

This is simply the amount you’ve borrowed to buy your home (the loan) compared with the mortgage lender valuation of the property.

​

For example, if you buy a home for £200,000, put down £20,000 as a deposit and have a mortgage of £180,000 – your LTV is 90%. This is because the amount you’ve borrowed (£180,000) is 90% of the home’s value (£200,000).

​

The lower the LTV, the lower your interest rate is likely to be. This is because the lender takes less risk with a smaller loan.

​

The cheapest rates are typically available for people with a 40% deposit, which works out as 60% LTV.

​

Make sure you can afford your monthly repayments

As a first-time home buyer, the most important thing to bear in mind is whether you can really afford to take this step.

​

Budget for other costs of buying a home

Apart from your monthly mortgage payments, there are others costs when buying a home.

​

These include:

​

survey costs

solicitor or conveyancer fees (this often includes extra costs, such as search and Land Registry fees)

mortgage arrangement and valuation fees

removal and moving in costs

buildings insurance

initial furnishing and decorating costs

Stamp Duty (Land and Buildings Transaction Tax in Scotland, or Land Transaction Tax in Wales).

​

Finding a mortgage

North Star Mortgages & Financial Services Ltd know a lot about the mortgage market and can help you find the mortgage that best suits your needs.

​

Freehold or leasehold

If you want to buy a house, it’s likely you’ll buy the freehold. This means you own the property and the land it sits on.

​

If you’re buying a flat, you’ll be buying leasehold, or buying into a share of the freehold.

​

The mortgage application process

Applying for a mortgage can seem like a long and confusing process, with a lot of forms to fill out.

​

You’ll need to provide evidence of your income, credit commitments and spending. If you’re self-employed, you’ll need to provide tax returns and business accounts for the last two or three years.

​

Lenders will carry out what’s called an affordability assessment. This is a detailed look at your finances, which lenders use to work out if you can afford your long-term repayments.