Step-by-Step Guide for UK First Time Buyers 2025 - Avoid Costly Mistakes:

The first thing I think I'll do and that's what I'll do next, each time I'm buying a house, and that's what I'll suggest would be to see what it is basically an agreement in principle. It is sort of like a gentleman's agreement. The lender is saying, I'm going to lend you this money after you've answered some questions. And if the questions you've answered checks out, when it comes to it finding the right mortgage, there's a way to do it, there's a right way to do it, and there's a not so smart way to do it. Don't go to your bank and ask them to give you a mortgage. No Foreign. Are you a first time buyer looking to buy your first property in the UK as an NHS staff member? Whether you're a doctor, dentist, nurse, physio or any other healthcare professional, you may be even be a member of the Royal College. But if you're not a member of the Royal Family and your last name is not Gross Benoit, chances are that you need a mortgage to buy your first home. And this would likely be your biggest financial decision yet. Now, if this is the case, then this video is for you. If you're looking to buy your first house and you think you might need a mortgage, you haven't got a wad of cash to go buy. Eat cash. This video will be very helpful as we'll be discussing everything you need about buying your first home as a first time buyer getting mortgages in the in the uk. And at the end of the video, I'll give you a free gift, a download of my free step by step guide for first time buyers that you can use. I've written this based on my own experience and I've broken it down in a simple way that you can understand. Now, if you're new to this channel or if you just stumbled across this video and you're wondering, how did I get so lucky? Well, welcome to Moneywise doctor. And here we share financial insights for doctors, NHS professionals, nurses, dentists, basically to help you to make smart financial decisions and to avoid costly mistakes that doctors and NHS professionals often make. So if you've got any questions in the course of this video, feel free to pop them in the comment section and I'll be happy to come back to answer them.

I just want to take a minute to thank you for what you've done. Yes, you watching this channel now? Let me tell you what it is. So this channel has grown at amazing rate. It has grown at an amazing rate from 0 to over 1400 subscribers just within 4 months, months of launching it. Now, this is beyond my wildest imagination, and when we launched a few months ago, I thought it might take us a couple of years, maybe three years to even cross the 1000 mark. So thank you. However, something really fascinating has come to my notice and I thought I should share it with you. I've come to see from our YouTube analytics, from our numbers, from the back end, that 70% of you who watch this channel regularly and listen to the Money Wife Doctor podcast yet to hit that subscribe button, that precious subscribe button on our YouTube channel. You see, when I first made this call a few weeks ago, it was about 75%. So thanks to you, the number has dropped from 75 to 70 just about the past few weeks. And I'm grateful. Well, our target is to get to 50%. If we can get 50% of the regular watchers subscribe, that would be fantastic. And I want to speak to the other 70%. While I thank the 30% who have already subscribed to the other 70%. My question is, why haven't you subscribed? Tell me in the comments. So you see, this channel is a journey of financial empowerment for doctors, dentists, and healthcare professionals. And your support means everything to us. We're glad that you're on this journey with us, but it will mean the world to me if you hit the subscribe button. So I'm here to ask just a small favor and that will cost you nothing. Actually, subscribing to The Money Wise Doctor podcast on YouTube helps us immensely. It helps us to scale up. It helps us to be able to bring in expert guests and more interesting people and helps us to enhance the quality of our production. And overall, this will make it bigger and a better channel for you, providing you with financial education that will help you build a stronger financial future as a medic and help you to avoid making costly financial mistakes. So if you've watched our channel before or read our blog, or if you found value in our episodes or you listened to the podcast, and if you like what you're watching right now, please can you hit the subscribe button. Go ahead, smash the subscribe button. So thank you for watching. And now let's jump back to this episode.

Right? So now let's dive in. If you're buying for the first time, you're buying. If you're. You're thinking of buying a house and this is your first time, obviously it can be quite overwhelming sometimes. Because you have a lot of questions, you have a lot of things you're unsure about, and you're about to make a big choice to make the biggest purchase of your life. I'll give you an example in my own case. Several years ago, in my very first year working in the NHS as a junior doctor, I made one of the most significant decisions of my life. I bought my first house. Well, it's not as significant as getting married, but I was single then. Now, looking back, there are a few things I wish someone had shared with me before I took that decision. But you know what? I consider myself lucky because I narrowly avoided making some costly financial mistakes that would have still been haunting me till today. And so that's why I'm here, to ensure that you don't make the same, can avoid the same mistakes and you can go about it in a smart way. You can go about it in a way that you don't turn around having a lot of regrets. Because buying a first home as a, with a mortgage as a first time buyer is more than just a transaction. It's a bit of a leap of faith. It's a step towards building your future. I know it might not sound that serious, but you're committing to this huge amount of money depth and navigating the the measures of mortgage and real estate. You can feel like going through uncharted territory, especially for busy health care professionals like yourself. That's why I would like to break it down step by step in this video. So let's jump right in. We'll start with the beginning. I'll start with the dirty B word. Budgeting. So budgeting for your first home. Nobody wants to hear about budgeting, but it's pretty important. So let's play with that first. Before scrolling through property listings on Zoopla and rightmove, let's talk about budgeting. So you can start your house hunt online and you can start looking in your area. But your budget is key and will determine what sort of house you buy. That way you can begin your search with a clear understanding of what you can afford. So it would be best to consider what you can afford for a deposit. So most times you could go up to 10 to 15% or even more. What's your deposit? Monthly mortgage payments and other accompanying expenses that most people don't think about like conveyancing fees, home insurance, and of course put something by the side for repairs. Again, if you are a first time buyer, but you're not eligible for first time buyer stamp duty relief due to the price of the house you're buying, then you need to factor in sdlt, that's palm duty land tax in your budget. And I'll tell you a bit about stamp duty land tax, which I think is a very strange, weird tax I've had to pay a few times. So for anyone meeting the definition of a first time buyer, so it's your first time buying a house, a higher stamp duty land tax threshold is usually applied. Especially from September 2022 till 2025, you can actually buy a house up to £425,000 and not have to pay stamp duty. So if you buy a house above that amount, you have to pay standard land tax. Now think about affordability. From the point of being a pessimist, don't think, oh, I'm going to be able to pay. Think of it very carefully. I think you should stretch as much as possible. Think of all the possibilities of things that could go wrong. You may not be able to think of all of them. A rule of thumb I tend to suggest is that your mortgage payment should not be more than a third, one third of your income. Your salary should, you know, your mortgage permission not be more than a third of your income. That's the way I'll think about it now, why current interest rates are currently unstable. And I remember at the time I bought my first house, interest rates were as low as 1% and it seemed like a good idea to buy a big house and to, to take on a lot of mortgage. But now interest rates have tripled and no one can actually predict which way they will go. So it's always good to assume what could happen. If it triples or doubles, will I still be able to pay? So finally, it's essential to budget for other closing costs as well. These are fees like convenience fees. You've got to pay a lawyer, you might have to do a survey, you might have to pay your mortgage advisor and all of that. So think about these things when you're factoring in your mortgage cost and your budget again. Now, choosing your mortgage, finding the right mortgage, there's a way to do it, there's a right way to do it, and there's a not so smart way to do it. But because I know most of people on this channel, actually you in particular, you're smart, I'm sure you're going to do it in the smart way and I'll suggest to you what I'll do. So choosing the right mortgage is incredibly important. For the first time buyer, it's not just about Getting the best rate. It's also about understanding what are the features and benefits that are most relevant to you and this can all significantly impact your budget. So this section, you want to look at it quite carefully and what you want to consider are the various types of mortgages and which one will be suitable for you. On the mortgage market can have a wide variety of options and products that they might come up with different names but a lot of them actually fall into a few distinct categories and I'm going to explain them to you. There seem to come with lower interest rate and they are more flexible and they can make it a bit more easier to qualify as a first time buyer. There are also some government programs which you can look at in details. But what's important is that for you to get a mortgage, don't go to your bank and ask them to give you a mortgage. No, the best thing to do will actually be to look at the whole market, find out who is giving the best deals, starting with a mortgage advisor, an independent mortgage advisor, not one from your bank. But here I've summarized in this table which you can see on the screen if you're watching on YouTube the different types of mortgage and I'll tell you, I'll walk you through them so you can see table 1 money wise doctor guide to understanding Mortgage options for First Time Buyers in the UK So it's basically a summary of the mortgage options for first time buyers in uk. So number one is the fixed rate mortgage, number two is the variable rate mortgage, number three is the tracker mortgage. I'll explain them in details. Now the fixed rate mortgage I think if you want to sleep well, probably be the one you go for As a first time buyer the interest rate stays fixed throughout this initial period so you know exactly how much you're paying every month. The monthly payments don't change. The downside is that when interest rates go down, your payments don't go down, it remains the same. But some people rather say well I don't mind, I want to pay the same thing. So I'm sure the next two to five years. Now the second one, the variable rate mortgage interest rates can obviously vary. Just as name says, at any time the monthly repayments are flexible and of course you can benefit from lower payments when the interest rate falls. But the bad news with that is that interest rate and repayments can increase making it harder to budget for which has happened over the last few years. And of course there's a tracker mortgage which basically the interest rate for follows the bank of England base rate plus a fixed percentage. So the monthly payments follows the base rate and the repayments follow the base rate. So if it goes up, it goes up. If it comes down, it comes down. The bad news again with this pipe or the disadvantage that is unpredictable as you wouldn't know exactly how much your payments would be with each month in my opinion. I tend to think that first time buyers with lots of moving parts, I would rather go for a fixed rate at the beginning beginning. So I know exactly what I'm going to be paying for the next two to five years. But obviously you speak to an independent mortgage advisors. This is not professional financial advice or anything like that. Now let's look at the government schemes for the first time buyer mortgage that you may be able to benefit from as a doctor or dentist or NHS worker. And there are quite a few of them. One of the most popular ones is the Lifetime ISA which we've done quite a lot of videos on. If you. If you go to our channel you can see videos. I would say lifetime does not. Lifetime ISA does not start affronting. But although there is no current specific NHS mortgage scheme, several UK government schemes can assist key workers, including NHS staff in getting on the property ladder and nearly pushed down my table there. Now working with an. In a very experienced independent mortgage advisor. Look at the keywords, their experience independent mortgage advisor again who has expertise in dealing with NHS staff and can assess the whole market can be highly beneficial. So this is not the same as just going to one bank or one particular lender. You want to go to someone who can check the whole market and also understands working with you as a doctor because our income structures can confuse mortgage advisors with. You don't tend to understand it quite properly. Might be able to say you want to work with someone who understands these things. But if you look at the table below the next table, I've summarized the government schemes. Again, if you're watching on YouTube you can see the table. If you're not watching on YouTube or even if you're watching, don't worry, I've included a PDF that you can download for free. A link to a PDF can download for free with all of the spirit steps one by one and all the different schemes including the government schemes. So let's look at the government schemes. Number one, we mentioned the lifetime ISA which we've done a lot of videos on. I'll touch on it. Number two, there's the help to build equity loan. This is obviously for people who want to build instead of buy. Number Three, there's a shared ownership scheme. Number four, there's a right to buy scheme. Number five, the first home scheme. And number six, there's a mortgage guarantee scheme. So there's quite a few options. And if you head over to moneywisedoctor.com we've got all this treated in a detailed article and you can also download it as well from the links in the video, in the comments, in the comments section. Now the lifetime isa. Yeah, I don't think we'll dwell too much on it because there's already a video on it. Just search in the channel. But the highlight of it is that the deposit required is only £1. Obviously you want to put more. The ownership type is full ownership. So when you, when you buy a house with it, you own the house. Benefits is that the government can contribute up to 25% on up to £4,000 annually. So you can get as much as a thousand pounds annually, but you have to be between 18 to 39 and must be a first home and the home cannot exceed £450,000, especially if you're outside London. So that's it. Now for help. To buy is a bit of an equity loan. The deposit required varies, but the ownership type again is a full ownership. The benefit is that the government equity loan helps you to fund your custom house building. So if you want to sell, build your own home, this one will be for you. I don't consider myself as Bob the builder or any sort of a house builder, so I wouldn't go for that one in details. Again, the requirements are also on the PDF, which is you can get in the link, you can download it. I can head over to moneywisedoctor.com to get that. Now the other scheme we mentioned is the shared ownership scheme, as the name goes, is shared, so deposit required will vary. It varies from 5 to 25%. Ownership type is part by pat rent and benefits. It enables people to get on the housing ladder with a smaller deposit. So you have a smaller mortgage and smaller deposit and then you can buy more shares of the house as your income increases. So at the beginning you own a little bit of it, they keep buying to you, you buy the whole equity in the house.

So.

But there are a few requirements. Your gross annual household income should be 80,000 pounds or less when buying outside London and 90,000 pounds or less if you're buying inside London. So that's the summary of it. Yeah. So there's also the right to buy scheme. Deposit required, not applicable per se. An ownership type is also free. Full ownership. The benefits it could actually work quite well for council tenants. They are offered a discount of up to 96000 pounds roughly I think in London is up to 127, 940 in London to help you buy the home that you're renting. So you go from renting to ownership but you must be a secure tenant and have been a public sector tenant for at least three years. So people can just go and go and rent it and then try to buy it in the same year. Yeah. So these are some of the schemes. There's also the first home schemes. We usually require deposit of 5% again full ownership if you're able to buy it. The homes are discounted by at least 30% compared to the market prices which is nice. Who wouldn't like to get like a discounted home with. But they are clearly criteria. They are clear criteria and requirements. There has to be a first time buyer earning less than £80,000 annually. And of course if you live in London it has to be £90,000. There's one more the mortgage guarantee scheme. So the deposit required for that again is 5% deposit ownership type again is full ownership. Of course the benefits are clear. You can get a 95% loan to value more engage with participating lenders because not every lender offers this option and they offer is offering a government backed guarantee. Again as you expect the clear criteria is not for everyone properties the properties must cost 600000 pounds or less is available to first time buyers and existing home owners looking to move. So if you live outside London and you know in the in the south most times you'll be able to find props. I'm sure even in London and in the southwest and southeast can find proxy that less than 600,000. Even less than that. So now let's move into the next steps. How to apply for a MOD gauge as a first time buyer in the nhs. Let's get into the nitty gritty. So if you're ready to take the plunge and you want to apply for your first mod gauge, let's look at the nitty gritty and let's walk you through the steps step by steps. Now basically the first thing you want to start when you want to start applying for a mortgage. We've talked about budget, you decided how much you want to spend, how much house you want to buy and again applying for a mortgage. It doesn't need to be an uphill task if you have the right guidance. The first thing I think I'll do and that's what I'll do next. Each time I'm buying a house house and that's what I suggest would be to speak to a mortgage advisor. You don't need to wait till you're ready when you're already planning it, you think it will be in the next six months. Speak to a mortgage advisor, get some advice, find out what sort of mortgage you can get. They usually offer you a face to face meeting or a telephone or video meeting and sort of walk through things with you like what's the affordability. They might do eligibility checks because most times the lenders, not most times all lenders, they will assess your monthly income, expense expenses, credit score. They want to know your work status to determine if mortgage payments will be manageable for you. So it's best to work with a mortgage advice, understand what will be needed and get those things ready. And based on this they may recommend some products for you to consider and make a choice. Most good mortgage advisors will recommend at least two or three or even more, especially the independent market advisor. Labor got access to the whole market. Now the next will be gathering the essential paperwork. So if you're going to need your utility bills, you're going to need proof of id, you're going to need your bank statements, you're going to need your credit score rather credit report, getting all those things in order. And if you're on a visa, if you're on a Tier 2 visa, for instance, you're an expert rate or international medical graduate making sure that your vision visa is also ready. It's all part of the documents. Now if you've got all that in place, the mortgage advice might help you to put through the application. And the application in itself might be online. It could be a paper from most applications are done online these days or it might even be a PDF for you to fill out depending on the lender and what they require. But it's really important to stay organized and follow the Advantage Advisor's guideline step by step to ensure a smooth application. You don't want headaches, you don't want to think you submitted a document and most better they're asking for it right now. I've mentioned Mortgage Advisor a few times, so let's address that. Having the right mortgage advisor who understands your unique income structure as a doctor or NHS worker or even your VISA situation as an IMG is quite crucial. Unfortunately this single factor, if you get it wrong, will turn your mortgage application process into a nightmare. You understand that doctors sometimes for instance your training, your Income is going to go up. But some mortgage advice, you don't understand that. And if you're an img, you're on a two year visa, you're most likely going to get another one at the end of your training becoming a consultant or a gp. So it's really important than to work with advisors who understand NHS doctors and healthcare professionals and have had experience working with NHS doctors and healthcare professionals. And that's partly on money. Why? On moneywise.com we've got advisors that we've actually vetted and screened who have worked with doctors and healthcare professionals to make sure that they have a smooth outcome. Right now there's a bit more, there's other things to look at. If you're going to buy your first house, your deposit is not all the expense and there are some little, little calls that people tend to not look at and it, it suddenly comes out from the blues. For some people, there could be broker fees, lenders fees, valuation fees, conveyancing fees and all little expenses that you might make along the way. So make a plan for this one as fair as well. So don't only think about the deposit. Now the next thing, agreement in principle. Agreement in principle. I hear a lot of people say, how can I get an agreement in principle? Or it's also called decision in principle. Well, it's not that difficult actually. If you've determined your budget and you're ready to go, you can either walk through your mortgage advice or you can go online yourself to get an agreement in principle. Remember, even if you get it from any bank or anywhere, you don't necessarily have to use that same one. What it is basically an agreement in principle. It is sort of like a gentleman's agreement. The lender is saying, I'm going to lend you this money after you've answered some questions. And if the questions you've answered checks out, when it comes to it, I'll lend you this money. So you can actually go online. If you want to get an agreement in principle, you can actually go online. If you live in the UK residential, you've got every document that is required. You can jump online and say, get an agreement in principle and just mention a bank. You can go online, fill it out, all out and get one downloaded. Sometimes when you're looking at houses and when you're trying to buy a house, sellers might actually take you a bit more serious. Most times, sellers, representative, like agents, they ask questions like, have you got an agreement in principle? So they know for sure they're not just shopping around, you're actually interested and you're taking steps. Ready to buy. Yeah. And if you get an agreement in principle, it's not a binding document. If you're along the line, talk to a mortgage advisor and they find a better deal. Some of the mortgages I've used in the past, I've never heard of those banks before. I use them. So the mortgage advisors, some of them could get like up to 90 lenders. So it's really quite important to understand these things. But get an agreement with principle shouldn't be an issue, it shouldn't be something that will stop you. And so there you have it. These are the steps you can actually take to get yourself ready to buy your first house. You have the blueprint now and if you wanted to get it step by step, you wanted to get a copy that you can download. Don't forget to download our free guide with the links in the description or head over to Moneywise doctor And download it now. If you've got other questions around finding your house, how to negotiate a deal, how much you should offer, or any other questions around mortgage or buying your first house, feel free to pop them in the comments now. If you found the video useful, feel free to share it to someone who may find it beneficial, maybe a colleague at work or your friend who might be thinking of buying their first house and they're confused views. And if you like the video, chances are you like the playlist in our channel on YouTube that is on mod giddies for first time buyers and NHS workers. All right, till next week. All right then. Bye bye.