If this all sounds a bit daunting, don’t be unduly disheartened; there are some plusses to being a first time buyer:

 

 

Another aspect you can look into when thinking about how much you can afford to borrow, is that of a rental income. If you are going to have a spare room, you could rent it out to a lodger (tax free up to £4,250). This is particularly significant because some lenders will factor this into the mortgage affordability equation. It doesn’t sound like a lot but it might just be that extra little bit that you need to get on the property ladder.

 

Other Costs

 

Once you have had your offer accepted and your mortgage approved, there are other costs to be borne. Stamp duty is payable if the property costs £120,000 or more. It is payable on the following graded scale;

You will also have to pay for a valuation of the home you intend to buy on behalf of the lender. This will cost you about £150. If you then decide to have a survey done in addition to the valuation, this will cost you more. A homebuyer’s survey is advisable and will cost you around £350, dependent on the value of the house. A full structural survey will be necessary if there is suspicion of a structural defects or if the property is particularly old and/or unusual. A full structural survey will cost around £500 upwards, but if you’re a first time buyer you should be staying well clear of this sort of property anyway. Note that the valuation cost is included in both types of survey.

Other costs incurred when you make your purchase will include:

 

 Conveyancing – a hefty figure of around £400-£500 for your solicitor to put your name on the deeds.

 Telegraphic transfer – the charge for the lender transferring the money to your solicitor, normally around £25-35.

 Mortgage arrangement fee - (often called a product fee) - this is normally somewhere in the region of £500.

 Home insurance – your lender will insist that you take out insurance to protect their investment, starts at around £15 per month (watch out for insurance penalties imposed by certain lenders for not taking out the insurance with them!).

 Life assurance – also compulsory so that the mortgage is paid in the event of your death, starts at around £30 per month.

 Moving costs – the magnitude of which can vary wildly depending on whether you do it yourself (a few hundred) or get the professionals in (£1000 upwards).

Thanks to the new government’s HIP (Home Information Pack) scheme, as the buyer, you no longer have to pay for land searches and land registry costs. This will save you around £200-£300. As part of the HIP you will also get an EPC (Energy Performance Certificate). This is a rating of how energy efficient your new house is. It is given a rating from A through to G for both energy efficiency and environmental impact (Carbon Dioxide emissions); “A” being the most efficient. This is all well and good, but if you’re buying and old house don’t read too much into it, bearing in mind that an old house is unlikely to have insulation in the walls and under the floors!

Recent years have not been particularly kind to building companies, particularly in the demand for new-build flats. This may be one reason why they are particularly welcoming of first time buyers, offering great incentives such as paying your deposit or even your mortgage for a limited time. Other deals may include free carpets and curtains throughout, saving hundreds of pounds. What is particularly attractive about a new-build is the fact that it will be ready to move into with new bathroom, fitted kitchen and little maintenance needed. Deals will depend on your personal circumstances and will vary dramatically depending on who you are talking to, and when. At the time of writing (January 2008) Bryant, Persimmon and Barratt Homes seem to be offering the best deals for first timers. Also, Redrow have an “affordable” housing range called “Debut” which may be worth a look. These are one to two bedroom flats that start at around £60,000, depending on where you want to live.

Conventional Shared Ownership 

This is only available to Housing Association (or Registered Social Landlord) tenants. This scheme allows you to buy a share in the house (around 25-30%) whilst renting the remaining percentage from the Housing Association. After a year, you then have the option of buying further shares in the property at current market value.

Do-It-Yourself Shared Ownership

This is similar to conventional shared ownership but you get to pick a property off the open market and buy it on shared ownership terms with a local housing association. Like conventional shared ownership, you take out a mortgage for the percentage that you own and pay rent on the part that you don’t.

Homebuy

This National scheme assists the first time buyer by funding 25% of the house price through a housing association. The buyer takes out a mortgage for the remaining 75% and the housing association will not recover its 25% share in the house until it is resold.

Key Worker Homebuy

This scheme applies to key workers such as doctors, nurses and teachers, allowing them to get a foothold on the open property market in London. The scheme covers property less than 90 minutes travelling time from work, up to a value of £210,000 and includes an equity loan of £50,000.

Eligibility for Home Ownership Schemes

Each scheme will have a different priority lists which will vary from one local authority to another. The best advice is to contact them to see if you are eligible, but you can use the following standards as a rough guideline of qualification:

 

 Residency in the borough for a minimum of 2 years.

 Minimum household income of £17,000, maximum income of £42,000 (£50,000 for a couple).

 Possession of a European Union or British passport, or permanent resident status for other passport holders