Things are looking up for first time buyers after this year’s decision to scrap the stamp duty on the first £300,000 of properties worth up to £500,000 on those new to the property ladder. However, despite this huge cut to the first-time buyer’s bill, saving for a house is still a hugely daunting process.
Therefore, we’ve put together a few tips from Quick Move Now for first time property buyers about saving for a house:
Saving for a house – money, money, money
It takes time when saving for a house and many first-time buyers are caught out by paying high-levels of rent and, therefore, being unable, for a longer period of time, to save up for their own home.
Buying a home is one of the largest purchases we make in our lifetime and, therefore, may take further research and planning in order to make the right decision.
A help-to-buy ISA is an excellent means of getting on the property ladder.
Also referred to as a first-time buyer savings account, a mortgage ISA or save to buy scheme, help-to-buy ISAs offer those new to the property ladder the opportunity to earn up to 2.27% tax-free interest and also have 25% free cash for your first property, added by the state.
This is a great method for first-time buyers to save the minimum deposit for a house.
Average deposit for a house
Here at Quick Move Now, we often get asked the question “How much deposit do I need to buy a house?”. The answer to that is generally between 5% to 20%, ultimately, if your first home will cost £200,000, you’ll need a deposit of £10,000. However, this may differ if you, or your partner, are self-employed, or haven’t been in your job role for at least 2 years.
Ultimately, your lender wants to know that you have the income to pay back your mortgage without going into arrears. There are various deposit amounts and mortgage terms that can be applied to different situations to make your pay back options suitable for your situation. For example, you may have a large deposit and be self-employed, or you may have a smaller deposit but a highly-paid full-time job.
Don’t forget the further costs of buying a home
Once you’ve secured your mortgage and saved up a deposit, you’ll also need to budget for the following:
- Utility bills (Can you afford this every month along with the mortgage payments?)
- Life insurance
- Home/buildings insurance
- The process of moving (removal vans and men)
- Any DIY work that needs doing on the house
- Estate agency fees
- Soliciting/conveyancing fees
- The valuation for your mortgage broker
- Stamp duty (only if your property is worth over £500,000)
10 mortgage brokers you may want to consider:
There are different types of mortgages out there, these include: Interest only and repayment mortgages, fixed term and variable.
Your mortgage lender will expect you to know which mortgage you’d prefer and will make you an offer based on your income and personal situation.
You may want to consider applying for a mortgage with the following 10 brokers, of course there are plenty of others available, however, take a look at these for reference:
- Lloyds TSB
- Yorkshire Building Society
- First Direct
- Royal Bank of Scotland
- Post Office