Five tips for first-time buyers

Rapidly increasing house prices and rising interest rates have delivered tough times for first-time buyers over the past year.

Those saving to climb onto the property ladder have seen the cost of their potential first home rise by more than 10% over the past year, according to Land Registry figures.
And mortgage costs have risen with the bank rate having been ratcheted up by 1% to 5.5% since last August. In a tight market for first-time buyers it is more important than ever to get to know the areas that you are looking to buy in. Here are five tips that can help secure a first home.

1. Know your area

Before you start looking around properties get a feel for how much they are selling for by looking through local property supplements and online. Websites such as findaproperty.com and primelocation.com list of properties for sale in your area through estate agents.

It is also worthwhile checking the new generation of property search engines such as zoomf.com and nestoria.co.uk, private sale websites, such as First4Sale.co.uk, HouseLadder.co.uk, and online agents such as Housenetwork.co.uk

Find out how much properties have sold for recently by using online house price finders such as thisishouseprices.co.uk and nethouseprices.co.uk.

2. Unravel the jargon

Property terms can be a mystery to the uninitiated. Time spent finding out exactly what terms mean and reading about the homebuying process will give you more confidence in what you are doing and make it less likely that something will go wrong.

Don't be scared to ask if you don't understand something and for comprehensive information about the whole homebuying process read the guides at www.thisismoney.co.uk/propertyguides

3. Learn about mortgages

The range of mortgages on offer to first-time buyers is wider than ever before, but this choice can be baffling. Fixed rate deals are generally best for first-time buyers, who need security against any interest rate rises.

Meanwhile, taking a repayment mortgage is a sensible option, as although interest-only loans are cheaper you will not pay off any of the cost of your home. A wide range of rates and deals are on offer and it is best to shop around and be wary of highly-advertised special offers. For advice visit www.thisismoney.co.uk/mortgages

4. Balance your budget

While it might be tempting to go all out for your dream home and borrow as much as you can, it is vital that you do not over extend yourself. Running a home is expensive and you will need cash for essentials such as home insurance, council tax, utility bills and any maintenance charges.

Make sure you have at least £200 - £250 set aside for bills each month and don't forget you will need to eat. To find out how to keep your bills to a minimum visit www.thisismoney.co.uk/householdbills

5. Don't pay over the odds

Fear that they may miss out or just embarrassment about haggling can mean first-time buyers fail to negotiate. It is the estate agent's job to get as much as possible for a property.

If you make an offer they have to pass it on to their client, stand firm if they say it is too low and insist you want it passed on. General advice is to make an offer at 10% to 15% below the asking price and raise it by £1,000 each time. Look out for properties that have had their asking price reduced, this means the seller is keen to strike a deal.

Simon Lambert, This is Money
9 June 2007