Our step-by-step checklist guides you from kicking off your savings plan right through to searching for your first home.
So you’ve decided you want to start your journey from renter to buyer. What now? Where to start? We’ve put together this handy checklist to help you navigate the process from saving to buying.
… and do it asap! You don’t need an exact goal or plan to start, but the sooner you start, the better.
Aim to save £10/day (min. £300/month)
Open a Lifetime ISA if you haven’t already
Set yourself realistic expectations: you’re going to need to at least £12,500 for a deposit
Assess your spending habits:
Identify areas where you can cut back
Research more cost-effective options
Make sure your plans are sustainable
Let’s quickly talk saving timelines:
Starting from zero and at £300 per month – with no other lump sums or assistance – you can expect to need to save for your deposit for 3.5 years.
Understand your deposit potential:
If you’re a freelancer with under 2 years’ accounts, expect to need a higher deposit (currently up to 20%)
If you’re looking at new builds you can take advantage of Help To Buy’s 5% deposit
Otherwise, be aware that at time of writing (12th Nov 2020) nearly all 5% and 10% deposits have been removed from the market, due to COVID-19
Get familiar with mortgage calculators – you can play around with different property prices and deposit amounts to help you understand what you can afford
Get to grips with “income multiples”. This is something that many people aren’t aware of. Most mortgage providers will only lend up to 4.5 x your income
Be realistic about your first home. It should be a “starter home”, with a price of no more than £250K - £300K
Get on top of your credit score
Check your credit score with a couple of different providers, such as Clearscore, Experian, Equifax and TransUnion
**Make sure you only get a soft search done**
Start to fix any errors or issues that are flagged, such as:
Assess your outgoings: avoid big expenses and rein in spending, especially if you’re close to applying for a mortgage
Avoid applying for any more credit of any kind, especially in the later stages of saving and applying for a mortgage!
Take a proactive approach to your optimising your credit score:
Register to vote… at the right address
Make a plan to pay off debts
Be sure to pay your bills on time
Cancel any credit cards you don’t use
Definitely don’t take out cash with your credit card
Try not to go over your arranged overdraft
Avoid payday loans
Check whether your credit is linked to someone else’s
Try not to move home too many times
Ironically: try and build up a little credit
You might be asking yourself: how do I “build up a little credit”? By this, we mean: consider getting a credit card but absolutely manage it carefully. It proves to lenders that you can be reliable with credit.
Get Clued Up
While you’re working through the above items on our checklist, you can be yet more proactive and productive in your journey to becoming a homeowner. Arm yourself with the right knowledge to feel in control and empowered at each stage of the homebuying process.
Educate yourself on:
Make sure to get to grips with:
What to look for and look out for in your property search
Types of property:
You're Almost Ready For Checklist #2
Once you've ticked everything off on this checklist it's time to turn to the wisdom in our second piece 'Home Buying Checklist: From Offer to Move In'. We cover everything right through to getting the keys to your first home!