How to crack the code as a first-time buyer in Sussex in 2023

As house prices continue to rise every month, taking your first step on the property ladder is becoming more difficult, so we asked our teams to give us their top tips and unravel the most frequently asked questions to help you start the next chapter of your life.

 

Set a budget – and stick to it

Q2 has seen the cost of living become more expensive, with increases in inflation, fuel, and house prices making it harder for everyone to save money. The fundamentals, though, still apply.

Opening a saving account and/or a Help-To-Buy ISAs should be the first thing you do when for a deposit. Separating your money into different account makes it easier to control spending and, although it sounds unappetising, being strict with the amounts you spend is very important.

Fancy going out for a meal? Find a healthy takeaway. Want to have a night out with your friends? Invite them round for a couple of drinks and a night in. You don’t have to save for years – especially if you’re not buying on your own. First-time buyers can pay a deposit as small as 5% (£10,000 home you want costs £200,000). If you’re both strict with saving, you can be moved in before you know it.

Also, saving higher than the minimum deposit amount means you will save on other costs such as solicitor fees, mortgages, stamp duty tax, and more. You’ll also have a lower interest rate.

 

How to be accepted for a mortgage

Applying for your mortgage can be a long process with lots of paperwork, but getting your head around it from the start can make it much more straightforward.

You will have to provide evidence of annual income, your credit commitments, and past spending. If you are self-employed, you will also have to show your tax returns and business accounts spanning the last 2-3 years.

Lenders then examine your finances and credit history through affordability assessments. This is to make sure you will be able to repay the loan. We highly recommend checking your credit score before you apply for a mortgage because applications that are declined will also harm your chances of being accepted for future mortgages.

 

What is a Loan to Value?

A ‘Loan to Value’, or LTV, is not your deposit amount, but the loan you’ve taken out in comparison to the full price of the property you’re buying. Say you spend £20,000 on a deposit for a house that is priced at £200,000, your mortgage will be £180,000 and your LTV will be 90%.

The lower you can get your LTV, the lower your interest rate is likely to be. This is because all lenders see smaller loans as less of a risk. Rates are usually at their lowest when a deposit of 40% is paid, leaving the LTV at 60%.

 

What is the difference between freehold and leasehold?

When buying a house, you will be buying freehold. This means that you then own the property and its land.

When buying an apartment or flat, you will be buying leasehold. You will buy the property’s lease from the freeholder and will therefore have the right to live in the property for a specified length of time. This is normally a number of years. You will not own the property outright – the freeholder/landlord will still own of the property and its grounds.

 

Are there any schemes to help me buy for the first time?

Yes, and one of the best national schemes is the ‘Help to Buy’ scheme. Anyone looking to buy a new build property is eligible for this scheme as long as the property’s price is £600,000 or lower. The scheme includes an equity loan, which is when the government lends first-time and existing homeowners money to enable them to buy said home(s).

After meeting the criteria, you are able to borrow up to 20% of your desired property’s worth. This amount is available for the first five years after the loan begins. If the property you buy is in London, you can borrow up to 40%.

 

If you have any questions about how to make it onto the property ladder that haven’t been answered in this article, call your local branch and our property experts will be happy to answer any queries you have.