Getting on the property ladder

1. Focus on your personal finances

Consider these things before you start your search.

Here are a few ways you can make sure your finances are in order before you start house hunting.

If you’re not sure how much you need to save, online mortgage calculators are a great place to start. Money Saving Expert has eight calculators available and will give you a feel for how large a deposit you’ll need.

Start saving

The golden rule for first-time buyers is quite simply ‘save, save, save’. Make a budget, look after the pennies, and plan to put as much towards your deposit as you can. Normally, the bigger the deposit you have, the better your mortgage rate will be.

Here are some great ways to save:

• Find a less expensive rental while you save
• Combine streaming subscriptions into a family plan
• Use online banking to track your spending habits

Maximise your money

Saving into a cash ISA can be a good way to make your money work for you, as any interest you earn will be free of income tax. Building a deposit is difficult at the best of times, so it’s well worth finding an ISA that offers strong interest rates.

A Lifetime ISA (also known as a LISA) allows you to save up to £4,000 each year, to which the Government will add a 25% bonus – up to £1,000 per year. These boosted savings can then be used when you buy your first home (provided it matches certain criteria).

Clean up your credit score

Banks and mortgage lenders take lots of different aspects into account before offering you a mortgage, including your credit rating. If you have a particularly poor score, there may be some ‘easy wins’ to boost your rating – such as getting onto the electoral roll. You can check your credit rating for free with one of the three major credit agencies: Equifax, Experian, and TransUnion.

The score they provide is based on the information kept about you that is built up over time.

Ways to boost your credit score:

• Make regular payments on time
• Keep old accounts open and show a long credit history
• Get a credit builder card – making sure to pay the balance promptly
• Register on the electoral roll at your current address

2. Budget for any costs coming your way

You’ll need to have funds to cover these in addition to your deposit.

There are a few crucial costs that you’ll face once you’ve purchased your property, like Stamp Duty and, of course, your monthly mortgage payments.

Stamp Duty

Stamp Duty Land Taxes can cost thousands of pounds. But, thankfully, first-time buyers are exempt from paying Stamp Duty on homes up to the value of £425,000. This is a huge advantage for people looking to get onto the property ladder.

Monthly mortgage payments

There are countless different mortgage products available for first-time buyers, so make sure you explore your options fully before taking the plunge. A New Homes Mortgage Adviser (NHMA) will be able to assist if you are buying a new-build home but, whether you’re self-employed, opting for a parent-assisted mortgage or buying with your partner, make sure you do your research to find the best rate for you.

Getting a ‘mortgage in principle’ before you make an offer on a property confirms that a lender has agreed to lend you a certain amount. To do this, a lender will run a credit check and take some basic information from you, before giving you confirmation in the form of a certificate or statement.

Make sure you’ll have enough money to cover your mortgage payments as defaulting on a payment can cause a lot of issues.

3. Be ready for unexpected costs

These might crop up after you’ve completed the home buying process.

As a first-time buyer preparing to get on the property ladder, there are a few potential extra costs that are always worth budgeting for:

• Removal costs
• Solicitor fees
• Buildings insurance
• Furniture and white goods
• Potential ground rent and service charges
• If you’re buying an older property, you may need to budget for repairs

Words of wisdom

It’s always useful to talk to experts – like your mortgage adviser – and other people you know who’ve recently bought a home. And if anyone offers to help you out with moving, packing or redecorating, be sure to take them up on it!

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