As the UK’s capital and one of the world’s most beautiful cities, properties in London are always in high demand. If you’re interested in buying your first home here, we can help you navigate the process. Explore our guide to learn about first-time buyers’ schemes, finding the right mortgage and saving for your deposit.
Key Takeaways
Getting a Mortgage in London:
- The first step for most first-time buyers is securing a mortgage. Understand the types of mortgages available, such as fixed-rate and variable mortgages.
- Calculate how much you can afford to borrow based on your income and any debts you have.
- Consider using a mortgage advisor or broker to guide you through the process.
Deposit Amount:
- A larger deposit generally leads to more attractive mortgage rates. While schemes exist for 5% deposits, aim for 10-15% of the purchase price.
- The average deposit for first-time buyers in London was around 24% of the purchase price in 2022.
Upfront Costs:
- Besides the deposit, save money for upfront costs associated with buying a home.
Choosing Where to Live:
- Consider practical factors like budget and proximity to work, as well as emotional factors related to lifestyle and preferences
Who qualifies as a first-time buyer?
A first-time buyer is someone who has never owned a residential property before. This includes leaseholds and freeholds.
Things to do before applying for a mortgage
Ready to apply for a mortgage? Here’s what you can do beforehand to ensure a trouble-free process.
1. Explore the different mortgage types
For most first-time buyers in London, the first step to buying a home is getting a mortgage. A mortgage is a loan from a bank or building society towards the total cost of the house you want to buy.
There are many types of mortgages, but if you’re getting onto the property ladder, the most popular types are ‘fixed-rate’ and ‘variable’ mortgages.
Discover how to get the right mortgage in our handy guide.
2. Determine how much you can borrow
Before you decide where to live in London, it’s essential to determine how much you can borrow. Lenders typically lend up to 4.5 times your total annual income and that of anyone you’re buying the property with. They will consider your income, any debts you may have, spending habits and other personal circumstances.
Before applying, check your credit report to ensure your credit rating is in good shape. Experian, Equifax and TransUnion are good places to start. If there are any mistakes, you can correct them online.
3. Save for your deposit
Most lenders require a 10% deposit. For instance, if the house you want to buy costs £150,000, your deposit needs to be at least £15,000, and your lender will lend you the remaining 90%. This is known as the loan-to-value (LTV) ratio. Some lenders may let you buy with a 5% deposit. If you’re struggling, Skipton Building Society’s 100% mortgage could be up your street.
However, as a general rule, the bigger your deposit, the more mortgage deals you can access.
Remember to factor in the extra costs, including:
• Conveyancing or solicitor
• Estate agent
• Insurance
• Valuation
• Survey
• Removal
4. Consider Stamp Duty
Stamp Duty is the tax charged by the government when you buy a home or piece of land in England. The following rates apply:
| Minimum property purchase price | Maximum property purchase price | Stamp Duty % |
| £0 |
£250,000 (£425,000 for first-time buyers) |
0% |
| £250,001 |
£925,000 |
5% |
| £925,001 |
£1,500,000 |
10% |
| £1,500,000+ |
12% |
Stamp Duty must be paid within 14 days of completion. Your conveyancer will usually handle the paperwork and money transfer.
5. Browse first-time buyers’ schemes
If you’re a first-time buyer in London, there are some schemes you can take advantage of.
Deposit Unlock
The Deposit Unlock scheme helps you buy your first home with just a 5% deposit. It’s available on new build properties of up to £750,000.
Deposit Boost
If you have a 10% deposit, we could boost it with an additional 5% of the sale price. This way, you can borrow less from a lender and secure a more competitive mortgage rate.
Parent Power
If you expect to receive financial support from your family when buying your new home, our Parent Power scheme can help. We could match your deposit or buying costs by 5% of the property’s purchase price.
Stages of the mortgage application process
Now that you know how much you can afford, it’s time to start the application process. Below are the most important stages:
| Task | Time |
| Finding the right mortgage |
1-3 days |
| Getting a mortgage in principle |
24 hours |
| Applying for a mortgage |
3-6 hours |
| Getting your mortgage evaluated |
1-2 weeks |
| Receiving a mortgage offer |
2-4 weeks |
Looking for a new home? Explore our range of new build homes and flats in and around London. We also have fantastic homebuying offers to help you move.
Call our Sales Advisers today to get started.
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