How to Pay for Your First Home

How Should I Pay for My First Home?

How Should I pay for My First HomeFor many, the purchase of a first house is the largest financial commitment they’ll make. Apart from the significant expense, the whole process can be nerve-wracking and frustrating, not to mention incredibly time-consuming. Entering the market in the wake of a double-dip recession only makes it harder to obtain the cheap, easy mortgages which were once the mainstay of Britain’s property finance industry.

However, if you change your perspective a little, you’ll see that this dearth of cheap credit is a positive thing for you in the long run. Now, instead of shelling out for something you simply can’t afford, you must take a long, hard look at the reality of your financial situation and how it applies to the housing market. The first step is to find out your credit rating;  to get a free credit report visit

Once you’ve established that, ask yourself whether you want to go to the limits of the credit available to you, or whether to adopt a more conservative approach. During the peak of the property boom in the mid-noughties, it was common for lenders to give three-and-a-half times the main breadwinner’s income for a mortgage, or two-and-a-half times the joint income. Recently, these affordability measures have been reduced – sometimes drastically. Now you probably need to put down a larger deposit and show proof of a strong credit history.

Even if you manage to get a little extra than you imagined, it’s not necessarily wise to do so. Keep yourself in check, as interest rates can go up at any time. Remember, you can always upgrade to a bigger house in future if your financial situation improves.

If you go for a fixed rate term, the added security you gain is offset by the time limit imposed. Rates could well go up in the meantime. So approach a house purchase and mortgage with the degree of modesty that such an immense investment calls for. Your financial security is more important than that huge garden.

Remember, seek independent financial advice before making any agreement with a bank or mortgage lender.


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13 Responses to How to Pay for Your First Home

  1. Paul 12/12/2012 at 5:39 pm #

    A buyers inspection will reveal items that will need to be addressed. It is one of the best investments you can make before making a decision to buy a property.

  2. Nick 12/12/2012 at 5:23 am #

    A good piece – and we can certainly vouch for a lot of the stuff mentioned. It’s not just about the credit score though, we had to budget a lot for fees and solicitor costs, etc.

    Buying a house isn’t just the amount you see on paper… there are thousands of other expenses too!



  3. Paul 09/09/2012 at 2:03 am #

    We are getting our home ready to put on the market an looking forward to a lower interest rate!

  4. Robin @ Quizzle 09/06/2012 at 3:35 pm #

    This is an awesome article! So many first timers don’t have this information.
    Everything is flexible and change is constant. Grab the low rates when/if you can.

  5. Paul 06/20/2012 at 12:29 am #

    Glad you found it useful!

  6. Zero Passive Income 06/19/2012 at 5:27 pm #

    Great article. Very helpful for anyone looking to buy their first home.

  7. Paul 06/19/2012 at 2:56 pm #

    Glad it worked out for you Edward. Maybe you can upgrade the home in a few years after credit improves.

  8. Edward Antrobus 06/19/2012 at 4:55 am #

    Unfortunately, our credit kept us from being able to buy as much how as we could afford. But we ended up being really happy with the place we did get, so I guess it was for the best in the end.

  9. Paul 06/19/2012 at 4:57 am #

    We are thinking of selling and downsizing. Prices are great for buying but on the flip side not good for selling!

  10. Tie the Money Knot 06/18/2012 at 4:25 pm #

    Now seems like a better time to buy than in recent years, with all the price declines and low interest rates. However, the market around here (Chicago) still seems soft. There haven’t been the Arizona/Nevada/Florida price declines, but they’ve been significant enough anyway. I tend to think that there still could be some room for prices to drop/wait.

    Anyway, nice tips nonetheless.

  11. Paul 06/18/2012 at 2:02 pm #

    Prices are starting to creep up in Phoenix after a drop of over 40%!

  12. SB @ One Cent At A Time 06/18/2012 at 11:44 am #

    I’ll be in house market soon. Will be useful for me then.


  1. Jenny’s Super Saving Saturdays – 23rd June 2012 - 06/23/2012

    […] How to pay for your first home A helpful article for all the first time buyers out there, explaining some tips and advice to assist you in which can be a particularly stressful, and sometimes confusing time. […]