Buying a home

Buying a home is probably the biggest financial decision you will ever make so it's worth taking time to consider whether it's the right choice for you. You will become responsible for all the costs of maintaining the property, including major structural repairs, routine repairs and improvements.

What costs are involved?

mortgage repayments;
mortgage protection insurance for if you fall ill or lose your job;
life assurance to enable your family to pay off the mortgage if you die;
contents insurance against the risk of theft, fire, flood or other accidents;
council tax and water charges;
gas, electricity, telephone, etc;
ground rent and service charges may apply.

As part of the process of buying a house or flat you may also need to pay for:

a solicitor or licensed conveyancer
an independent survey
the mortgage to be arranged
the Land Registry fee
Stamp Duty

As a tenant, you may be able to claim housing benefit to help with the rent. As an owner-occupier, you will not receive any housing benefit to help with your mortgage costs. You may be entitled to income support to assist with housing costs, but this is not usually payable for nine months after you first claim it.

The Money Advice Service provides lots of info and advice on buying a home.

Tax on buying a property

If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings. Rates are available on the HM Revenue & Customs website.

Mortgages

A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies.

With hundreds of mortgage deals on the market, it's hard to know where to start. You can use a mortgage broker, or shop around yourself and go direct to the lender. Whatever you decide, it's important to understand how mortgages are regulated and sold.

Types of mortgage

When you choose a mortgage, you'll need to think about the repayment method, interest rate deals and special features of some mortgages. The best one for you will depend on your circumstances - so it's important to understand your options and shop around.

Repayment methods

There are the two main ways you can pay off your mortgage:

Repayment mortgage - With a repayment mortgage you make monthly repayments for an agreed period (the term) until you've paid back the loan and the interest.
Interest only mortgage - With an interest only mortgage you make monthly repayments for an agreed period but this will only cover the interest on your loan. You'll normally also have to pay into another savings or investment plan that'll hopefully pay off the loan at the end of the term.

The Money Advice Services mortgages and homes page has information about different types of mortgages.

Low-cost home ownership schemes

Whether you are a council or housing association tenant, key worker or first-time buyer there is a range of schemes available to help you get your foot on the property ladder.

Who can apply?

If you cannot afford to buy a home there are many different ways you can get help. Each individual scheme will have its own criteria – so check the details of each scheme with your landlord or the relevant 'HomeBuy Agent'. You may be eligible if you are:

a council tenant;
a housing association tenant;
a key worker (eg teacher or police officer);
a first-time buyer with a household income of less than £60,000 per year and who can’t afford to buy a property on the open market without help.

Find out about the FirstBuy and HomeBuy schemes on Directgov's equity loans and how they work.