1. Start saving for a deposit early
The average age of a first-time buyer is 32, so use your twenties wisely as a time to start saving. The average deposit is around £45,000, so consider opening a Lifetime ISA that lets you save up to £4,000 every tax year towards a first home costing up to £450,000 or your retirement, with the government adding a 25% bonus on top of what you save. That means you could get up to £1,000 of free cash annually and earn tax-free interest on your savings. Consider moving home with your parents to reduce outgoings and boost your savings. A bigger deposit means you will borrow less, and with a lower loan-to-value (LTV) you could be eligible for a mortgage at a lower interest rate.
2. Check your credit rating
Lenders will check your credit score, so make sure you have a clean credit history by paying off credit cards in full on time each month and keeping up to date with your rent, bills and Council Tax, as missed or late payments can reduce your score. Avoid applying for credit six months before your mortgage application, and be sure you are on the electoral roll at your current address.
3. How much could you borrow?
Ask a mortgage broker to look at your finances and advise how much you could borrow, then get a mortgage agreement in principle (AIP) to show you’re a serious buyer. First-time buyers will not pay Stamp Duty on homes up to £425,000 until 31 March 2025, which could help. You may be eligible for a 100% mortgage or the Mortgage Guarantee Scheme, which requires as little as a 5 per cent deposit. If buying a brand-new property, a green mortgage can offer cash back or lower interest rates as the property will be more energy efficient. New home developers may also offer specific incentives to help first-time buyers.
4. Compare prices in your chosen area
Thoroughly research the area where you would like to live to find out what you can afford You may be able to buy a larger property if you are prepared to consider moving to a slightly cheaper area. Finding a home with the potential to extend could also save moving again. You could also consider Shared Ownership, where you buy a percentage of the property and pay rent to a Housing Association on the rest, buying extra shares in the property as you can afford it.
5.Extra financial help
The “Bank of mum and dad” features highly when it comes to putting down a bigger deposit. Still, there are many other ways lenders accept parents’ help, from interest-earning cash deposits that offset your mortgage to income boosters and borrowing against their own home to help.
There are many ways of getting on the ladder, and you could find yourself a proud homeowner sooner than you think. Your local estate agents are experienced in helping out first-time buyers and are the best first source of advice on the entire process, so get in touch!