First Time Buyer’s Guide to Shared Ownership

It’s finally time for one of the biggest milestones you’ll face in your life – buying your first home. Whilst it’s an exciting prospect, it can also feel somewhat daunting at the same time. And that’s completely understandable, as there can be a lot to think about if you’ve yet to get your foot onto the property ladder. Preparing for the journey ahead will not only save time but also help ease any of those first time buyer worries. Though, help is at hand with our comprehensive guide and advice for first time buyers. Plus, we’ve also got a little secret to let you in on, that will make getting onto the property ladder a piece of cake – Shared Ownership.

What is a First Time Buyer?

The first time buyer definition is exactly what it says on the tin – someone who has never owned a property before and is buying their first residential home. First time home buyers generally have a good shot when applying to buy a property, as they won’t have another property to sell before purchase. This means that they won’t be involved in a ‘property chain’ – (line of buyers and sellers connected together since each is selling and buying a house from one of the others).

If you’ve owned a house/flat before, whether it was in the UK or abroad, you may not be eligible for most of the schemes designed to help first time buyers. Even if you’re putting in a joint application and one of you has previously owned a property, you still won’t be classed as a first time buyer. However, this isn't the case with shared ownership. As long as you have sold your current property/have an offer on your home you would be able to proceed with an application to buy a shared ownership home.

How to Buy Your First Home

Let’s simplify the essential first steps to buying your first home:

1. Save for a deposit

First thing’s first, before you start searching for your dream home, you need to save for a deposit. The minimum you’ll normally need is 5% of the purchase price. For example, if you the property you’ve got your eyes on costs £250,000, you’ll need to save up a deposit of at least £12,500.

Now you may be thinking – but what if I can’t scrape together that hefty deposit? Fear not! Shared Ownership will save the day.

2. Consider Shared Ownership

One way to make purchasing your first pad easier is to only buy part of it and you can do that with Shared Ownership. It’s a scheme that’s been designed to help first time buyers (and anyone else who fits the eligibility criteria) get onto the property ladder, and it works by letting you buy a proportion of your dream home – typically between 40% and 75% and then pay rent on the remainder. What better way to make buying your first home more affordable? Plus, in some cases, you can even buy as low as 25% with Aster!

Best of all, once you’ve bought your Shared Ownership property, you can then continue to buy shares – known as ‘staircasing’. In most instances, you can eventually own 100%, just ask us once you’ve seen a property of interest and we can check whether this is possible within the lease for you.

If you want to know more about how this fantastic scheme works, we’ve got you covered with all the need-to-knows!

3. Spruce up your credit score

Whilst you’re saving to buy your first home, it’s also a good time to clean up your credit rating, ready for when you apply for a mortgage. Lenders want to see that you’re going to be a reliable borrower when they’re reviewing your application, so having a good credit score will go a long way. 

You can boost your score by:

  • Getting on the electoral roll.
  • Checking your credit file for free using credit monitor.
  • Not missing payments and keeping credit applications down.

First Time Buyer Mortgage

Getting the best mortgage doesn’t just need a decent credit score, there’s a couple of other things you need to do as well before you apply for your first mortgage. Here is our mortgage advice for first time buyers:

  • Save up as much as you can for your deposit – the more you save up, the more you can put down towards your first property purchase, which means the less you’ll need to borrow via a mortgage – music to any first time buyer’s ears! This’ll also mean you should have a lower loan to value ratio on your home and access to better borrowing rates.
  • Talk to a mortgage advisor – first time buyer mortgage advice is super beneficial! Using a mortgage broker and their expertise will be a lifesaver. They can give you an estimate of how much you can afford to borrow as a mortgage, so you know what sort of house prices you can afford in your area before you start house hunting. In fact, we work alongside of TMP – our mortgage advisors who truly are knights in shining armour. They’ll help you get the best possible mortgage suited to your personal circumstance. TMP can also help you navigate the mortgage market for the first time, exploring different options and even introducing you to lenders who you weren’t familiar with before, but have the most well-suited outcome for you.
  • Close old, inactive accounts – if you’re not using a bank or credit card account, it’s definitely worth closing it, as leaving it open may be a fraud risk and it could also show out-of-date details. Though, when applying for a mortgage, longer, stable credit relationships are a big win! So, if you have two credit cards, one that you’ve newly opened as well as an older one, it’s not worth closing the older one before your mortgage application, as you could lose the credit score boost it offers you. Remember – if you’re closing an account, it’s not enough to just cut the card up and be done with it – you need to actually tell the bank that you want it to be closed.
  • Don’t apply for other credit shortly before a mortgage – steer clear of applying for credit within the three months before getting a mortgage as it could hurt your score and lead to rejection. Some even advise a six-month gap just to be on the safe side!
  • Spend wisely – lenders will likely want to see your bank statements so they can get a good idea of what your outgoings are. This is because lenders are required to ‘stress test’ borrowers. They just need to check that you’ll still be able to afford your mortgage, even if rates went up to 6% or even 7%.

With Shared Ownership, you’ll only need to take out a mortgage on your percentage share. So, it’s a win win situation – a lower amount borrowed and a lower deposit paid – the best of both worlds. All that’s left down to you after that is to pay rent on the remaining share.

Remember – most online mortgage calculators aren’t relevant to Shared Ownership mortgages since they don’t take into account the element of rent. So, when you’re on the hunt for a mortgage, make sure to check that your lender does offer Shared Ownership mortgages as not all do.

And there’s more where that came from! If you’re eager to know more about Shared Ownership mortgages, we’ve done the hard work for you and put it all into one.

Budgeting for First Time Buyers

You’ve probably heard of all the bigger, generic costs that come with buying your first home. It’s not all about saving for a deposit. From legal fees to stamp duty, here’s what else you’ll need to set money aside for:

  • Survey costs
  • Mortgage arrangement and valuation fees
  • Removal costs
  • Home insurance
  • Initial furnishing and decorating costs

Get clued up with our nifty guide that’s all about the associated costs when buying a house, so you can avoid any unexpected surprises down the line.

First Time Buyer Property Search

Essentially, your first home will probably be one of the biggest purchases of your life. And we’ve all got an idea in our head of the picture-perfect property we want to settle in. So, here are a couple of tips on how to find your dream home:

  1. Collate a list of the areas you’d like to live in – if you’re moving to an area you don’t know, it’s a good idea to discuss with a local estate agent who can advise on the best areas.
  2. Make a list of your property requirements – how many bedrooms do you need? Is having a garden important to you? Do you want off street parking? Will it be a deal breaker if it’s far from work or your children’s school? Do you prefer older, traditional houses or newer ones? The more you think about what you want the easier it’ll be.
  3. Speak to estate agents – some homes never make it online believe it or not! They’re sold before they even get chance to appear there. If you want all the goss on the latest, hottest deals, it’s a good idea to form relationships with local estate agents. Once they get hold of a house sale that matches your needs, they’ll be able to notify you first, before others see or hear of it. The best place to start is with our Sales Negotiators at Aster who work in the region you’d like to live in. They can put you on a list of ‘interested buyers’ so you can be the first to hear about upcoming developments and sign you up for property alerts.

House Viewing Tips for First Time Home Buyers

Here are Aster’s top tips when it comes to viewing properties as a first time home buyer:

1. Know your budget

Once you’ve worked out what you can afford, make sure to stick to it! Estate agents may show you some houses just above your limit, but trust us when say, no matter how much money you have, it always seems like your dream home is just that little bit more. So, stick to your guns and try and keep to your budgeted property price. Give yourself some wriggle room so you’ll have more money for any unexpected costs that may crop up, or to use to kit out your new home. Remember – most things tend to end up costing more than you think, especially when you’ve got those other associated costs with buying a house to factor in too.

2. Drive by

First impressions count! Even before the viewing, it’s a good idea to go and see the house from the outside. Most of the time, this is enough to know a property isn’t the one for you. You can really get a good feel for the neighbourhood this way, driving around nearby streets too.

3. Make a list of questions

Preparing a list of all the things that are important to you and any questions you want to ask before your house viewing is a must. Once you’re in the property, it’s easy for things to slip your mind.

4. Check, check and check some more

Don’t forget that this is one of the biggest purchases you’re going to make in your life and no one’s going to blame you for being nosy. Check all fixed cupboards, particularly under the sink. Ask to see the loft too and take a torch in case there’s no lighting.

5. Ask about what’s included

You want to know you’re getting your money’s worth so ask what fixtures and fittings the sellers are planning to leave.

Buying Your First Home

Once you’ve found ‘the one’ it’s time to make that killer offer.

  1. Before putting in an offer, think about all the different factors – does your dream home meet all your conditions? Is the location suitable?
  2. Consider your negotiating position – if you’re a first-time buyer, you’re not in a chain or you have a pre-arranged mortgage offer (or all of these apply to you), make sure to let the agent know because you’re in a seriously favourable negotiating position. It could be the difference between whether your offer or someone else's is accepted!
  3. Before making an offer, find out the seller’s stance – if they’ve had the house on the market for a lengthy amount of time, the seller may be willing to accept a lower offer. But if the seller isn’t in a rush to move, they’re more likely to stick it out until they get a higher price.

Got your eyes set on the perfect property and need more advice? You’re in good hands with our guide on how to make an offer on a house.

First Time Buyer’s Checklist

Once you’ve bagged that home that you’ve had your heart set on, as a first time buyer, there are a couple of things to do before moving in:

Before the big day

  • Buy furniture and furnishings
  • Start packing early and pack a box of essentials for your first day in your new pad
  • Set up utility bills
  • Sort out your insurance
  • Redirect your mail
  • Get a TV licence

On the big day

  • Take final meter readings
  • Take an inventory to check all items promised in the sale have been included
  • Locate your appliance manuals
  • Unpack and celebrate with a glass of bubbly (or cup of tea if you’d prefer!)

There’s no better way to stay on top of your to-do list than with our moving house checklist.

FAQs

What is the first thing you need to do before buying a house?

Before you start looking at properties, book an appointment with a mortgage broker to get first time home buyer mortgage advice. They’ll be able to assess certain details like your income and profession, to give you an idea of what you may be able to afford.

What is the average first time buyer age?

According to the Guardian, as of January 2022, the average age of the first-time buyer has risen above 30 in every region in the UK.

Do first time buyers pay stamp duty?

First-time buyers will not have to pay Stamp Duty on houses costing up to £300,000 but a discounted rate on property purchases up to £500,000.

What is classed as first time buyer?

A first-time buyer is someone who’s never owned a property before. A person getting a mortgage who isn't a homeowner, home mover, buy-to-let investor or re-mortgaging is classed as a first-time buyer.

What should first time buyers look for?

Location and house size are key when buying a home for the first time.

How do first time buyers need to save?

Usually, you need to try and save up at least 5% of the cost of the property you'd like to purchase. Shared Ownership lets you buy part of a property and pay rent on the rest, so your deposit will be lower, since you’ll only need one between 5% and 10% of the value of the share you’re buying as opposed to the full property price.

What should you ask when viewing a house?

How long has the house been up for sale? What's the area like? What work has been done on the house? What's included in the sale?

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