Buying your first home is one of the most exciting things you can do – but it’s also one of the scariest. With loads to think about and constantly changing information about mortgages, rates and what you should and shouldn’t do, we came up with a simple guide to stepping onto the first rung of the property ladder.

Unless you’re really lucky, you’re going to need a mortgage of some sort. This loan will be with you for a long chunk of time – usually 25 years – so it’s worth doing your research before you commit.

Are you ready? Are you really ready?

Before you can get your mortgage, you’ll need a deposit. The very thought of saving for this is enough to strike fear into the heart of many first time buyers.

A 10% deposit on the average property at the moment would be almost £17,000 and a 20% deposit around £34,000. This gives you a rough idea of the amount you will need to save – it does, of course, depend on a number of factors, including what you’re buying and whether you have any savings or outside help.

It’s a commitment, of course, and will need discipline and planning, but it’s definitely worth it. Just think of that moment when you’re given keys to your very own house!

So, how much can you borrow?

New rules have also introduced a stringent affordability test for mortgage applicants, where you will be closely questioned on your outgoings and expenditure to ensure you will be able to afford the mortgage repayments.

Our mortgage calculator can help you work out how much you could borrow and what it will cost.

In addition to the deposit there are other costs to think about:

  • Mortgage set up fees
    The mortgage booking fee can cost from £99 to £250. Then there’s the mortgage arrangement fee, which is between zero and over £2,000 depending on the lender and your interest rate. Add on to this another charge usually between £100 and £300 (mortgage account fee) to cover administration costs.
  • Valuation fee
    Your chosen house will need to be valued to make sure it’s the right mortgage amount. This can cost between £150 and £1,500.
  • Higher lending charge
    If you need to borrow most of the property value then you may have to pay an insurance fee, which is usually about 1.5% of the mortgage.
  • Council searches
    £250-£300 will cover searches into any local issues.
  • Solicitors’ fees
    Buyers usually need a solicitor, which can typically cost £500-£1,500 including VAT at 20%.
  • Stamp Duty
    As a buyer you have to pay this tax for any property valued over £125,000. You’ll need to pay the rate of tax on the part of the property price within each tax band – like income tax. For more information on these tax bands, look at part two of this guide.
  • Survey costs
    You should check out if there are problems with the new place. There are different surveys you can commission, depending on the kind of property you’re buying. If it’s a new build then you’re looking at around £250 but if you want a comprehensive structural survey it can cost over £650.
  • Removal costs
    Moving your stuff can cost around £300-£600 depending on how much you have and how far you’re going. You can also pay them to pack your belongings.

Is your mortgage future-proof?

If you’ve been living with your folks and saved up a nice big deposit you may feel like you’re all set. But you need to keep an eye on rising interest rates. Interest rates have been low for a long time and will have to rise at some point. Even a small rise could seriously affect your monthly budget, so factor this in when deciding on the amount you want to borrow.

Think about what could happen

Remember that buying at the very top of your budget might mean suffering down the line should house prices fall. If you get stuck in negative equity (where your home is worth less than your mortgage) you may struggle to sell and mortgage payments might become tricky.

To avoid falling into this trap, have a think about the possible effects on your budget and your lifestyle should prices drop and interest rates rise.

Where should you buy?

It should come as no surprise that the area you look in will affect what you can get for your money. Prices in London are rising three times as fast as house prices in the north. Consider widening your prospective area – it could be worth commuting.

It’s a lot to think about and we know it’s a big decision. For more information on things you’ll need to know when it comes to buying your first home, see here:

When you buy your new home, you might also want to think about insurance, such as life cover or home insurance, and make sure you have everything you need.