The YouMove First Time Buyer Guide

First Time Buyer

Cutting costs

Bank of mum and dad

The most obvious way in which parents can help their children get onto the property ladder is to pay or loan money towards the deposit.

Another way is for them to guarantee part or all of the mortgage. Once you are in a stronger financial position you should be able to get your parents' names taken off the mortgage

Co-buying

Co-buying with a partner, friends or siblings is a way of reducing costs across the board by sharing them with others. While co-buying has become more common with rising house prices there are some important things to consider.

Firstly, all the parties to the mortgage will be jointly and severally liable. This means that if one party loses their job and can no longer make payments the other parties will have to pay the shortfall or risk the house being repossessed. Would you be able to cope if this happened?

Secondly, it is important to agree in advance how much each party will be paying both towards the deposit and the mortgage and what percentage of the property they will own as a result.

You should certainly get your solicitor to draw up a co-habitation agreement (if buying with your partner) or a joint ownership agreement (if buying with friends or family). This will be invaluable in the event of any future disputes.

Co-buying is often a stepping stone onto the property ladder so you need to consider what you will do if and when one party wants to move on. Will you sell? Will one buy the other out? Agreeing (or at least discussing) these things in advance can make them a lot easier to deal with.

New builds

Most developers are offering incentives, particularly now with the market being so slow. One solution for buyers struggling to find a deposit is to find a developer who will "gift you" the deposit.

This is when, rather than simply giving you a discount, the developer keeps the price the same but pays the deposit for you. For this to work the lender will have to be happy that the price of the property, including the deposit, is an accurate reflection of its market value.

Silly offers

In a depressed market don't be afraid to make silly offers. When houses have been on the market for months with no interest you never know how desperate the seller might be.

Before making any offers though, make sure you do a proper job of valuing the property you are interested in. See our separate "Guide to Buying" for more details on why this is important and how to do it.

Auctions

Jumping straight in with an auction for your first property might seem ambitious, but it's becoming a more and more common way for people to buy.

With so many repossessions as a result of the credit crunch and recession there are many properties being sold at auction to choose from.

If you do buy at auction you need to be in a position to complete quickly — usually within a month. Bear in mind also that if the hammer goes down and you are the successful bidder then you have entered into a legally binding contract. Make sure you do your homework first!

Lodgers

A great way to offset the cost of servicing a mortgage is to have a lodger. Under the HMRC "rent a room" scheme you can receive the first £4,250 of rent tax free. See the HMRC website for details.