Wimbledon residents enjoy the benefits of living close to the city and can take advantage of the Common, the parks and the slower pace of life. This makes Wimbledon a desirable prospect for potential buyers and attracts many first-time buyers to choose Wimbledon as the place to begin their journey on the property ladder.
When it comes to buying a property in Wimbledon, first-time buyers must have a firm strategy in place before they begin their search. In this guide, we offer tips and advice for first-time buyers looking to get onto the property ladder in Wimbledon.
What is a first time buyer?
A first time home buyer is an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.
Most people’s image of a first-time buyer is usually a young couple or a single person with limited funds looking for a one or two-bedroom property. Although this may be true in many cases, there are some people who, for various reasons, are coming to the property market for the first time with sufficient funds to buy something more substantial than a modest-sized apartment. And there are plenty of properties in Wimbledon that will be of interest to both types of first-time buyers.
How much deposit do I need to buy a house?
Before you begin your property search, you will need to have a sufficient deposit in place. You should aim to save 10% of the cost of the property, although some lenders will offer mortgages with just a 5% deposit. For the best mortgage rates, you will need at least a 25% deposit.
For example, to buy a property for £500,000 you will need to save at least £25,000 (5%).
If your money is locked in a fixed-rate account, make sure you can access the funds in time without incurring large penalties.
Budget for the other costs of buying a home
Apart from the cost of the property itself, there are other costs you will incur when buying a property. These include:
- Survey costs
- Solicitors fees
- Mortgage arrangement fees
- Stamp duty
- Removal costs
- Buildings insurance
- Initial furnishing and decorating costs
Stamp duty is a is a one-off tax that must be paid when you buy a property or land. Outside the stamp duty exception period, first-time buyers in England and Northern Ireland benefit from tax relief on stamp duty.
First-time buyers paying less than £300,000 or less for a property will pay no stamp duty. First-time buyers paying between £300,00 and £500,000 will pay stamp duty at 5% on the purchase price that exceeds £300,000.
First time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates.
Get a mortgage agreed in principle
Before you start viewing properties it is a good idea to get a mortgage agreed in principle, this will give you an idea of how much you can borrow and prove to estate agents that you are serious about buying.
The offer will only be valid for a fixed period of time and is just an estimate. The actual mortgage you take out will depend on how much you pay for the property.
Make sure you can afford your monthly repayments
As a first time home buyer, it is important to make sure you can afford the mortgage repayments as well as your other bills. When you apply for a mortgage, your lender will conduct an affordability test to check that you can afford the mortgage. You will need to show the lender evidence of your outgoings and well as your income.
It is also wise to stress test your repayments, for example, what if interest rate were to rise or you decided to start a family?
Research the area
Do your own independent research. Research the area to make sure it has all the amenities you require, such as schools, shops, and places of entertainment.
Research the property
Research your chosen property, and don’t be afraid to ask questions. Complete a survey. If you really like a property, it’s important to act swiftly with putting in an offer, but make sure you know the nature of the property and whether any drastic renovation work may be required, as you’ll have to factor that into costs.
While researching a property, lean on the estate agent and use their expertise. Of course, first-time buyers have the advantage over other buyers because they do not have a property to sell, so are not part of a chain.
Freehold or leasehold
If you are buying a house, you will be buying the freehold, meaning you own the property and the land it sits on.
Most flats and apartments in Wimbledon are sold on a leasehold basis, although some are share of freehold.
Help for first-time buyers
The government has created Help to Buy schemes to give first-time home buyers a helping hand onto the property ladder. The main scheme is an equity loan. Under this scheme the government lends you up to 20% (40% if you’re in London) of the cost of your newly built home. You pay a deposit of at least 5% and arrange a mortgage to make up the rest. You won’t be charged interest on the Equity Loan for the first five years of owning your home. To be eligible you must be a first-time buyer and buy a new build home from a registered house builder.
Wimbledon has a wide range of properties for first-time buyers and at Robert Holmes, we can answer any questions first-time buyers may need to ask. So, if you are a first-time buyer looking to move to Wimbledon contact us now and let us help you find the right property for you.