Top Tips for First-Time Buyers in London

Are you considering buying a property in London? Maybe its your first purchase through a bridging loan. The process of doing so is very exciting, but can also appear to be very daunting. Many people can be put off by the mainstream media’s outlook what it is like to buy in London. According to them, the property market in London is subject to a landscape of empty townhouses which are owned by Russian oligarchs, heartless estate-agents who are only out for themselves and young buyers who are desperate for property in the capital, but having to resort to shed-like conditions. However, do not fret – this is simply not the case.

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It would be completely naïve to deny that the house prices in London are rather high and buying a property in London will mean you get less for your money than if you were to buy elsewhere in the country. Moreover, first-time buyers in particular face a number of new challenges but this doesn’t have to be a particular process. And remember, every property owner in London was once a first-time buyer themselves so do not let any challenges you may come across put you off buying in the old smoke.

In recent news, many news outlets are reporting that following the Brexit referendum the house prices in certain areas of London are dropping in 2018. This may be something you want to look into if you are thinking about buying for the first time in London.

If you are looking to purchase your first property in the capital city, we have some quick and easy tips to help you get yourself sorted out and onto that all important property ladder!

Start Saving

This may seem obvious, but saving effectively is absolutely vital. If you have some basic financial planning behind you, you will be able to see your dream of a London home become a very imminent reality.

We suggest creating a monthly direct debit which automatically pays from your current account into a savings account. This way you do not have to physically move the money, so you won’t even notice it’s absence. You can also choose the amount you want to spend and change it accordingly if you find it necessary. If you don’t have a savings account currently, it may be wise to take out a Help to Buy ISA, this will ensure an extra £50 appearing in your account for every £200 that you save.

Create a Budget to Stick to

Buying a house takes a lot of prioritising to reach your financial goal. To create a budget, make a list of all the possible expenses that you expect will pop up throughout the process of saving and buying, as well as the first few months of living in the property you have bought yourself.

You must cover all bases from insurance and mortgage payments to your standard utility bills. Having a budget that is clear will help you to have an accurate idea of how (and how not) to spend your money in the months before you move. In addition to this, you will have peace of mind knowing that you can afford to live well despite making this huge financial commitment.

To make your life slightly easier, you may want to consider consulting a trained financial advisor in order to help you organise your savings and to project all costs of your new purchases. If you feel like you need help to do this, please do so – it will work out better in the long term if you take help where you feel you need it.

Make Use of Government Schemes

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The UK government offer a Help to Buy programme, whilst it is not limited to first-time buyers, it can certainly make the process of getting on the property ladder a whole lot easier.

With the prices of properties in London being as high as they are, the government offers larger equity loans of 20 per cent to 40 per cent for buyers in the capital city specifically. Taking up on this offer will greatly reduce the cost of the mortgage you take out, which overall will make all those repayments seem a little less brutal. The good news is that these loans are not charged within the first five years of purchasing the property. Therefore, the stresses of the initial move are alleviated a little bit.

If you have a household income of less than £90,000 you will be entitled to buy a home in London through the shared ownership scheme. The shared ownership scheme lets you purchase a share of your property and pay a reduced amount of rent on those shares that you do not yet own. Ultimately, the shares are gradually bought back in segments until they are all paid off and the property is completely yours.

Research Mortgages

When shopping for mortgage deals, there is so much to consider such as interest rates, fees, borrowing periods and exit penalties. There can be so much to consider that you simply do not know where to begin. The best place to start is research to help clear the mist.

You should narrow things down by deciding the general type of mortgage that you think would suit you and your needs best. These could include:

  • Fixed Rate Mortgages – payments which do not change alongside the interest rates
  • Standard Variable Rate Mortgages – payments which do change alongside the interest rates
  • Capped Rate Mortgages – the standard variable rate cannot rise above a certain level, and it is therefore capped
  • Discount Mortgages – this is where the lender takes a certain amount of money off the standard variable rate for smaller payment instalments
  • Tracker Mortgages – the payments will change according to the Bank of England’s base rate
  • First-time buyer mortgages – the loans are easier and cheaper overall to pay for the first few years after it is taken out

Once you identify your preferred kind of mortgage with the price range and the deposit, your research will have just got a whole lot easier. You can find online mortgage calculators to help you find deals which are relevant to your preferences.