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First-time buyers

First-time buyers

There’s no feeling quite like buying your very first home. Having a place to call your own is something many people aspire to – and, with the growing number of options available to you as a first-time buyer, it might be more achievable than you think.

There’s no doubt that taking that first step onto the property ladder is an important milestone, and you may be feeling a little unsure about how to navigate the buying process. This guide has been designed to support you through the journey of being a first-time buyer, and help you on your way to collecting the keys for your very first home.

Breaking down the costs

When buying your first home, there are a number of things you need to consider. It’s a good idea to make a check-list of the areas you need to understand before taking that first step onto the property ladder. The list below is a good starting point:

  • The deposit
  • Stamp duty
  • Legal fees
  • Mortgages
  • Insurance
  • Council Tax

Deposit

A deposit is the amount of money you have already saved to put towards your new home. As a general rule, the higher your deposit, the better the mortgage rate you will be offered by lenders. Plus, the more money you put down as a deposit, the less you will have to pay back.

If you’re struggling to save for your deposit, or feel that you need a financial boost to kick start the buying process, it may be worth considering the Help to Buy scheme, which is available on a number of brand new Bellway homes. Under the scheme, you can borrow up to 20% of the purchase price interest-free for the first five years, as long as you have at least a 5% deposit. To find out more, take a look at our Help to Buy guide.

Stamp duty

Stamp duty land tax (SDLT) is a fixed sum of money paid upon purchase of a freehold property or land. In simple terms, this means you have to pay a percentage of the cost of your home to the government, as a one-off sum. The rate of stamp duty you’ll pay depends on the value of your home, and where in the UK you choose to buy.

In Wales, the tax is known as the land transaction tax (LLT) and in Scotland as the land and buildings transaction tax (LBTT).

Read below to find out how this affects first-time buyers:

When buying your first home you will not pay stamp duty on property costing up to £300,000 in England, or £175,000 in Scotland. If the price is above this, the amount you pay will depend on where you live. There is no first-time buyer relief in Wales.

In England you will pay 5% stamp duty on anything up to £500,000. Property costing more than £500,000 does not attract first-time buyer relief at all, so you will pay the tax due.

In Scotland you will pay stamp duty on property costing more than £175,000, according to that country’s standard rates.

If you are buying a home with somebody else then this has to be a first home for both of you, in order for you to be considered first-time buyers.

Legal fees

To handle the legal side of your purchase, you will need to hire a solicitor or licensed conveyancer. They will handle all of your contracts, give legal advice, carry out local searches, handle the Land Registry and transfer your funds for the purchase. Make sure to choose your solicitor carefully, using recommendations where possible, and ensure to maintain good communication with them throughout the buying process.

Moving costs

The cost of moving all of the furniture and belongings you’ve accumulated over the years is something many people overlook when buying their first home. If you’ve never moved before, or have been living in the same home for a while, this may seem like an overwhelming task. Luckily, there are thousands of moving companies across the UK that are dedicated to making this process as streamlined and stress-free as possible. The costs involved will depend on how much you need to move and how far you are moving, so it is a good idea to do some research ahead of time to find the best moving company to suit you.

Mortgages

There are a huge number of mortgage options available to first-time buyers, and with the growing number of government initiatives designed to help you get onto the property ladder, there’s never been a better time to buy. Some people may choose to hire a mortgage advisor in order to guide them through the many products available to them, while some simply choose to do their own research.

As a starting point, why not read our mortgages guide for a better idea of the options available.

Insurance

Your mortgage provider will require you to take out buildings insurance as a condition of your mortgage. This is to cover you against any structural issues your property may have, should you need to make repairs. Although not compulsory, contents insurance is generally considered a good idea, to safeguard your possessions. Peace of mind is important for anyone buying a home, but perhaps even more so for first-time buyers, so although it’s an extra expense, contents insurance may prove valuable should you ever need to replace your belongings.

Council Tax

Council Tax is a fee that your local council charges for the services it provides, like road repairs, rubbish collection and street lighting. Council tax is payable according to the valuation band for your home, the charges applied to each band by your local authority, and whether or not you are eligible for any discounts. The tax is most commonly paid in monthly instalments, so it is worth checking how much you are likely to pay when you move into your new home.

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