The first time home buyer's guide

Buying a house for the first time will probably be your biggest and most stressful purchase so far, but it can also be one of life’s most exciting and rewarding experiences. It’s a place to call home and an investment for the future.

Man and woman holding a red chair which they are moving into their new house

If you’re looking to become a first time home buyer, here are the main things you should bear in mind.

Check your credit score

You’ll need a healthy credit history to give lenders confidence in your ability to repay your mortgage. To see where you stand, start by checking your credit score with any or all of the three main credit reference agencies. Each looks at your credit history, debts and banking patterns to predict how much of a risk you pose to potential lenders. To learn more, read our guide on how to check your credit score.

There’s no universal credit score, but the higher the score, the more likely you are to be given the green light by banks and lenders for your mortgage.

What should first-time buyers do?

Manage your budget

‘Financial planning’ can sound a bit boring, but when it’s with the end goal of buying your dream home, it’s anything but.

The little things add up

Mortgage lenders consider your credit score and earning power, but also your spending habits. It’s worth totting up how much you spend each month on small but frequent purchases like travel and eating out. Finding cheaper options can add up to hundreds saved each month. Our Barclays Budget Planner can help manage costs and stay on top of your finances.

Putting the money you save towards paying off outstanding credit card balances and overdrafts will make you look better on paper to potential lenders.  And if you don’t have debts to clear, the spare cash is bound to come in handy for paying house-buying fees and taking care of essential DIY jobs after move-in day.

Help from the government

The Help to Buy ISA is no longer open to new customers as of 30 November 2019. However, if you already have one, you can continue saving into your account until 30 November 2029 and claim your bonus at any point up to 1 December 2030.

The Help to Buy ISA is a tax-free way for first time buyers to save up for a deposit to buy their first home. As long as you add at least £1,600, the government will top up your savings by 25%, up to a maximum £3,000 bonus. Conditions apply, including a maximum amount you can deposit each month and an upper limit on the property price.

Alternatively, shared ownership, is aimed at households that earn less than £80,000 (or £90,000 in London) and first-time home buyers. If you can’t afford the mortgage on your own, they’ll step in and buy 25–75% of the house. You’ll then pay rent on the rest, with the option to buy more shares when you can afford to.


First time buyer’s deposit

Your deposit is the money you pay towards your home purchase before any mortgage is considered. The size of your deposit determines how much of a mortgage you’ll need, to buy a home. Usually, it needs to be at least 10% of the total purchase. But that’s a minimum requirement. Generally, the bigger your deposit, the better off you’ll be. You’ll be offered a better mortgage rate, which means you’ll enjoy lower monthly mortgage payments. You can find out more at ‘What deposit do I need for a mortgage?’.

When you’re calculating how much you can afford for your deposit, you need to consider other expenses involved in buying a home. This includes legal fees, stamp duty, surveys, as well as moving expenses. These are costs that won’t be covered by a mortgage, so will have to be considered in advance.

Different types of mortgage

Once you’ve got your credit score and savings under control, it’s time to consider mortgages. There are fixed-rate, tracker, cashback, and interest-only mortgages. The variety can be daunting at first, but once you know the pros and cons of each, they’re pretty straightforward.

The basic premise is always the same: you borrow money for your property, then pay it back with interest to the bank or lender. Mortgages vary by interest rates, repayment terms, built-in charges, and the length of time agreed to pay the money back.

An interest-only mortgage involves paying back just the interest instead of repaying the money you borrowed to buy your house. Paying less back each month might sound great, but you have to remember that when the term ends you’ll still owe the full amount you borrowed and will need to pay it back, so don’t forget to have a plan on how you’ll make the repayments later on.

Fixed-rate mortgages are a particular type of standard repayment mortgage and are popular because they offer certainty. Your interest rate is fixed until an agreed date, so you’ll know exactly what you’ll be paying back each month. Your interest rate is fixed, meaning you know exactly what you’ll be paying back each month. That’s good news if rates go up, but if the rates drop, you’ll have to continue paying the higher rate.

You may also be offered a Tracker mortgage, which means you won't be tied down to a fixed rate, so your payments could go up or down depending on interest rates.

Finding the right mortgage for you largely depends on your finances and how much risk you feel comfortable with. A fixed-rate mortgage offers certainty, which many first-time buyers consider important. But if you have more financial knowledge and experience, you might be able to gain an advantage by using a tracker mortgage. Picking the right mortgage for your situation is important, so speak to a mortgage broker for free advice before signing on the dotted line.

Extra home-buying costs

That rainy day fund you’ve been working on will come in very handy when it’s nearly time to take the big step. Here are some of the less obvious but no less important fees you’ll need to bear in mind when buying a house for the first time.

Paying mortgage fees up front means you won’t have to pay interest on them, or you can spread the cost over a longer period and use the cash to pay for other fees.

  • Stamp duty. This is a government tax on homes over £125,000, but there are different rules if you’re buying your first home and the purchase price is £500,000 or less.
  • Legal fees. These will vary by solicitor, but expect to pay around £850–£1,500.
  • Mortgage fees. As well as the loan, the lender may charge you a booking fee.
  • Surveyor fees. A basic valuation could cost around £250, with a full survey costing closer to £600.
  • Valuation costs. These fees vary from £150 to £1,500 depending on the house value.
  • Money transfer fees. This is the cost of actually moving the money from the lender to the seller. 
  • You might need to buy new furniture and furnishings to make your new house feel like a proper home. If money’s tight after all the paperwork fees, paying on a credit card could give you some wiggle room, as long as you have a plan in place for paying back what you borrow. Barclaycard has lots of credit cards that could help you manage your money.

When to apply for a mortgage?

The best time to apply for a mortgage is before you start shopping for a home. That way, you’ll have a clear idea of how much you can actually borrow, and how much you’re able to spend.

There are several other benefits. Having an agreed mortgage will reassure estate agents that you’re a serious buyer, and prompt them to go the extra distance for you. Having an approved mortgage also allows you to react more quickly when you find your dream home. Most mortgage offers last between 3 and 6 months, which is usually enough time to find and finalize your home purchase.

Finally, when you do apply for a mortgage, keep in mind that many lenders will carry out a hard credit check, which could affect your credit score. Other lenders may only carry out a soft search, which won’t affect your credit score. So it’s always best to check with lenders before you apply for a mortgage. You can find out more about your credit score and what you’ll need to get a mortgage for a new home. You can also get helpful advice about taking care of your credit score at Barclays money management.

What's next?

Money’s bound to be a little tight after move-in day. Check out our advice on whether you should pay for home improvements on a credit card. Interest-free purchases and built-in protection if you need your money back can make paying on credit an attractive option for first-time home buyers.

Should I put home improvements on a credit card?