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Guidance for first time buyers in London

Posted on Thursday, 22nd October 2015 by

The first step to buying a house is to start saving!

Getting onto the property market can be tough, especially if you are a first time buyer planning to buy a property in London.

first time buyers in london

The average starter home price in London is at a high of £215,000.  This means that first time buyers in London would need to arrange for a deposit ranging between £10,750 to £43,000.

A deposit on a new home can range from 5% to 20% however the more you save for the deposit the easier it will be to get a mortgage as it affects both how much you can borrow, and what interest rate you can borrow at.

Mortgage

Lenders have strict checks on whether you can afford the mortgage or not.  They will ask for evidence of outgoings and proof of income. Lenders will check if you can survive the increase of interest rates or change of circumstances such as redundancy.

It will be handy to keep evidence such as household bills, other living costs, bank statements and pay slips available and try get written agreement from your lenders so that estate agents know that you are serious to purchase.

Tip!

  • Speak to mortgage brokers to get the best deals
  • Look into Government mortgage schemes, which can be useful when you have smaller 5% deposits such as Help to Buy (only available to new-built homes)

Other costs

You will need to consider if you have the budget to cover the other costs involved in buying a house too. These costs are:

  • Mortgage arrangement and Valuation fees
  • Solicitor’s fees
  • Stamp duty (this tax is paid on properties worth £125,000 or more. A 2% tax is paid on properties worth between £125,000 and £250,000, 5% on properties worth between £250,000 and £925,000, 10% on properties worth between £925,000 and £1.5 million and 12% on properties more than that)
  • Survey cost
  • Removal costs
  • Initial furnishing and decorating costs
  • Building Insurance

 

What type of property?

You will need to decide what type of property you want to buy. Whether you want a Freehold or Leasehold property. If you are buying a flat then it is likely to be leasehold or if you are buying into a share of a freehold and if you are buying a house then it is likely to be freehold.

Tip!

  • For freehold you are responsible for maintaining your property and land so include costs for this in your budget
  • For leasehold you are responsible for rent and service charges so keep this in mind when calculating your budget.

Putting in an offer

It is essential that you research how long the house has been on the market and whether other offers have been made so that it helps you determine what offer you should make.

 

Tip!

  • Search online for prices that properties that have been sold in the area to give you bargaining power.

For more information about buying property in London contact Rebecca Gunn

Talk to our legal team

The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.

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Rebecca Gunn - Residential Conveyancing
Rebecca Gunn - Residential Conveyancing
Rebecca.Gunn@ehlsolicitors.co.uk 0116 402 6688
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