Getting on the property ladder can be particularly difficult, especially in London.
The average deposit for a first-time buyer is currently 68% of their household income, but that rises to 177% in London.
With rising London house prices, it may seem increasingly impossible to get your foot on the property ladder in the capital.
However, with government schemes and new-build homes being built specifically for first-time buyers, owning your first home in London may not be as difficult as it first seemed. Additionally, it’s worth noting that London property prices may not be as high as you think they are.
We’ve put together a first-time buyer’s guide, although this one from Compare My Move takes you through the process of buying your first home in London, including saving up for a deposit and how to find London removal companies.
Saving Up a Deposit for Your London Property
Before looking for properties in London, you will need to save for a deposit.
Deposits tend to be between 5-20% of the cost of the home you would like, although this can go up to as much as 60%.
For example, if you want to buy a home for around £300,000 in London, you will need to save at least £15,000 for a 5% mortgage.
Generally, your mortgage provider is likely to give you a better deal if you have saved for a larger deposit. Saving more than 5% will open up a whole range of cheaper mortgages on the market.
You will need to ensure you can make repayments in the future, which your mortgage provider will assess before lending you the finances.
Consider Using a Mortgage Advisor
Signing up to mortgage with your bank may seem like the best option for you, but there could be a whole range of mortgages available to you that can only be found through mortgage brokers and advisors.
Mortgage advisors are trained professionals that will guide you through all the mortgages available to you and picking out the best package to suit your needs. Mortgage advisors can sometimes seem expensive, but they can save you a lot of money in repayments over the long-run if they find a good deal for you.
Budget for Other Buying Costs
When buying a home, you should always account for all costs that come with purchasing a property. This includes:
– Mortgage arrangement and valuation fees
– Conveyancing fees
– Survey cost
– Removal costs
– Stamp duty
On top of that, you may also have to budget for furnishing your property and building insurance. All of this could easily add up to as much as £10,000 on top of your deposit, although a lot of this can be added to your mortgage to make initial costs easier to deal with.
Where to Live in London
Now that you have your finances in place, you may want to consider where in London you would like to live (if you haven’t already).
Choosing where to live in London will depend on several factors, primarily what your budget can afford.
As a rule of thumb, the further away from Central London you go, the more you will get for your money.
For example, a budget of £300,000 will perhaps afford for a studio flat towards central London, but could easily buy you a two-bed flat or even a house further out in East London.
The Borough of Redbridge, on the outskirts of East London, offers a range of one to two-bed flats within £100,000-£200,000, and semi-detached houses for budgets more than £200,000.
In stark contrast, the average price in central boroughs like Westminster and Camden tops £1,000,000.
Purchasing a property is a big investment, so it is a good idea to identify any growth areas to increase the price of your property over the next few years.
As of 2017, any area to be linked by Crossrail is likely to see heavy price increases over the next 12 months. You should also look out for other developments occurring in nearby areas, such as new office buildings, new shops or houses.
Finding a Trustworthy Removal Company
A major part of buying a new home is the moving process, and it is vital you hire a reputable and trustworthy removal company.
Compare My Move is a free tool that matches your moving requirements with up to six verified and trusted removal companies, saving you up to 70% off your moving day costs.
Every removal company through Compare My Move must pass a vigorous six-step verification process before partnering with the comparison website.
First-Time Buyer Schemes
If you are still struggling to get a grasp of the property ladder, there are a number of schemes, both from the government and private companies, that have been created to making buying a house easier.
The Help to Buy scheme is a great way to alleviate costs, whether you are choosing their shared ownership scheme, equity loan or ISA. Shared ownership may be a good option to half the initial price of a property, and buy extra shares in your property when you can afford them.
Shared ownership is available from the government or through some private companies, most often only offered on new-build properties.
Find out how much your property is worth using our free online valuation tool.