First Time Buyers

If you are planning to buy a property for the first time then you need to know the pros and cons of house purchase before you start. Our specialist first time buyer advisors have access to all the main deals that help people gain a foot on the housing market.

It is a fact that less than 50 per cent of the country's population are unable to afford to buy their own homes. Despite what you may read, the cost of housing is still on the increase in all areas of the UK and with the average property costing around £120.000 and the average earnings being around £25,000 per annum, you need to be quite clear about what you can afford.

On the plus side, if you are able to cover the cost of a mortgage, interest rates are at a record low and as a first time buyer, you are not part of a ‘property chain' and are in an advantageous position when it comes to price negotiation with a vendor who may be anxious to sell.

The first thing you need to calculate is the size of the mortgage you can obtain. In that way you will be able to base your search for a property on a realistic expectation. Start by visiting a number of lenders to establish how much you can borrow and obtain an ‘agreement in principal'. The size of the loan will depend on a number of factors including the amount of capital you can put forward as a deposit and your annual earnings. Mortgage lenders generally advance a sum based on three times your yearly salary. In the case of a couple being joint purchasers, the sum is based on around two and a half times the combined annual earnings.
Do consider the additional costs involved in property purchase. These include:

• Stamp Duty – a tax levied on properties costing over £120,000.
• Structural surveys and valuations – generally insisted on by the lender.
• Legal costs.
• Insurance

It is for these reasons that many first timers decide to purchase a newly built property. Many new home builders offer generous discounts and incentives, including lump sum deposits, payment of legal charges and free soft furnishings and white goods.

If you cannot get a mortgage for the property of your choice on your own, you may consider sharing the purchase with friends. This trend is becoming very common, particularly in areas of high housing prices. It is certainly a good way of achieving that all important first step of property ownership and it will enable you to solve accommodation problems as well as jointly benefiting from any equity realised as the property increases in value.

Although mortgage lenders are now fully used to the concept of shared property purchase, the legalities are slightly more complicated and require a greater degree of thought about the size and type of home you actually buy. Generally, this sort of arrangement is a temporary measure for mutually beneficial financial reasons. On the plus side, the larger the property, the more space and the less potential friction between the residents (even best friends fall out over money and in times of stress). Conversely, larger properties are more expensive to run and maintain, so think careful before you commit.

Ensure that you have a water tight agreement drawn up by a solicitor. This must set out the terms of the arrangement and include details such as individual share entitlement should one party wish to sell and move out.