First-time home buyer guide: how to get on the London property ladder

Step one: know what you can do

"The first thing I did was scour Rightmove and Zoopla. I found this stunning 4 bed Victorian in Balham down a gorgeous leafy street, and I toggled the mortgage calculator to see how I'd afford it. Then I refined my search to show the lowest price first. Then I changed my search area out past zone 6, using my maps app on the side to calculate how many different busses it'd take to get me into work each day… Until I actually talked to someone, I had no idea what I could afford."

Wondering how much you can borrow? Start with Alexander Hall's mortgage calculator.

Beginning a property search can be overwhelming, so start with a plan. Your first call should be to book in an appointment with a mortgage advisor, like our partners Alexander Hall

Read:Best mortgage advice for first-time buyers

They will help you analyse all the different aspects of your situation that can affect your mortgage rate, sort through an exclusive range of mortgage products to find the best matches and then guide you through the application so it's successful.

Getting them involved at this stage means they can prepare you an Agreement in Principle (AIP). They can also tell you, as you're viewing properties, what might affect what a lender would offer.

Also referred to as decision in principle (DIP) or mortgage in principle (MIP), this determines how much you are able to borrow and involves a credit check. It allows you to view properties in your price range with confidence and have the evidence you need when making an offer. This document sets you apart as a serious buyer, so we strongly recommend you start here.

The average amount, if you're buying London property, is around 15% for a deposit. However there are options available with a 5% or 10% deposit. Typically if you have saved a larger deposit, you are likely to get a lower interest rate and smaller monthly repayments.

A fixed rate, such as a 2-year or 5-year fixed term, means the rate is secured for that amount of time. This makes it easier to budget as you know your mortgage outgoings will remain the same for that period. These products will often have early repayment charges on, should you wish to clear the debt before the end of the fixed rate period.

Variable-rate mortgages, such as tracker or discount products can change at any time based on the market. So you need to be confident you can afford those monthly payments in the event of a rate increase. Sometimes variable rates offer more flexibility compared to fixed products, but your Advisor will be able to review your circumstances and advice which would suit best.

There is no set mortgage term, but for first-time buyers we often see terms range from 25 to 40 years. The longer the term, the lower the monthly payments, but the greater the interest you'll need to repay over the life of the mortgage.

There are several schemes available for first-time buyers, but we highly recommend you get in touch with a professional. Contact Alexander Hall to discuss your eligibility and, if your chosen scheme requires a new build, contact Foxtons New Homes team to find the right property that is eligible for your scheme.

Deposit Unlock

This allows you to purchase certain new-build properties with just a 5% deposit. New build properties have a range of benefits for first time buyers, including the fact that everything from the appliances to the building itself is brand new so warranties are in place and maintenance is minimal. Also, new-build properties are typically more energy efficient than resale properties, which you can read more about in our article, Could energy efficiency sway buyers towards new-build homes?

First Homes

This is another scheme for new build, or properties that were previously bought as new build properties. It allows you to buy for 30-50% less than a property's market value.

There are stricter eligibility conditions: you must have a total household income of £90,000 if you live in London, and some councils specify that the home must cost no more than £420,000. You'll also need to only sell the home through the scheme too, and with the same percentage discount.

Shared Ownership

With shared ownership, you part-buy/part-rent a property. Your total household income must be below £90,000 and you'll have to be approved by the housing association as well.

Stamp duty savings

All first-time buyers will benefit from greater stamp duty savings on their purchase. Read more about it in our article What the stamp duty tax cut means for you, or see your savings through our stamp duty calculator.