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A Guide for First-Time Buyers Purchasing Property In London

February 1, 2022

There’s no denying it - London can certainly be an expensive place to purchase property, and a tricky place to start with when it comes to getting yourself on the property ladder. According to the Office of National Statistics, the average property price in England in November 2021 was £271,000, whereas for London it was £520,000.

Nevertheless, prices do vary significantly between boroughs, and there are a number of particularly expensive London neighbourhoods that jack the overall average capital property prices up significantly. When focusing on more affordable boroughs, interest rates remaining low and 95% mortgages still being backed by the government, first-time buyers are still in with a fighting chance of making London their first place to buy.

That said, interest rates are on the rise, with the Bank of England actioning its first increase since the onset of the pandemic, upping its main interest rate to 0.25% from the historically low 0.1%. With inflation pressures mounting, rates will again rise in February, and median forecasts predict another 0.25% increase.

While experts anticipate that rates will still remain relatively low despite the continued increases, if you are thinking of buying, the sooner you act, the better the interest rate deals you can lock-in.

Since stepping onto the property ladder can be an overwhelming prospect, here’s a guide to buying your first home in the capital.

Best places to buy in London for first time buyers

Famously exclusive London boroughs such as Kensington and Chelsea send London’s average property prices soaring, but not all neighbourhoods in the capital are anywhere near as pricey. So where in London should you buy if you’re on a budget?

Barking and Dagenham is currently the most affordable borough, coming in at an average property price of £336,449. The underground station at Barking connects the area well via the Hammersmith, City, and District lines, making it a popular choice for commuters.

The most easterly borough of the capital, Havering, is another popular choice for those wanting an easy commute and more affordable home-buying options. Current average property prices sit at £432,803. It will also likely grow in value once the long-anticipated Crossrail roll-out completes.

Bexley and Bromley are also up there with the most affordable boroughs in London. They don’t have any underground stations, unfortunately, but are otherwise well connected by trains and buses. Other lower-priced areas for property include Bexley, Newham, Croydon, Sutton, Enfield, Redbridge, Lewisham, and Greenwich. 

Related: The Cheapest Places To Rent In London

Mortgages for first time buyers

Securing your first mortgage can seem like a daunting task, but so long as you don’t have your head in the clouds and are organised and eligible, it should be straightforward enough.

It’s best to determine what your general eligibility and affordability are for a mortgage before you start your property search. You don’t want to waste valuable time getting your heart set on a particular property only to find out that it’s out of your price range. We recommend reading our blog post, The True Cost of Buying a Property in London, as a first step.

Added to that, with continued inventory deficits, the market is moving quite quickly at the moment, and the ideal scenario would be to have a pre-approval in place before you go house-hunting.

Getting your mortgage pre-approved not only gives you clarity as to what to look for, but it will help you to move quickly and with confidence when you find the right place.

Online mortgage calculators can give you a rough idea of what you could expect to be eligible to borrow, but it is important to consult with a mortgage specialist before getting any firm plans in mind. A mortgage expert can give you an accurate idea of how much you would be able to borrow based on your particular circumstances, including your income, credit rating, and other personal financial information.

To speak with our mortgage team for some friendly advice on mortgages for first-time buyers, get in touch with Mortgage Scout on 0800 1444 744.

How much deposit do you need?

For a first-time buyer in the UK, the average house deposit is currently around 15%. Ultimately, the larger the deposit, the smaller your interest rate will be and consequently, the lower your monthly repayments will be. A 15% deposit on a property priced at £350,000 would be £52,500. For many people, however, saving up such a big deposit feels virtually impossible.

To support more newcomers to enter the property market, the government is currently backing the return of 95% mortgages with select lenders.

What is a 95% mortgage?

As part of the 2021 budget, the new mortgage guarantee scheme is currently enabling lenders to offer 95% mortgages with the government’s promise to effectively insure the mortgage lender in the event of any defaults.

These mortgages allow buyers to put as little as 5% down as a deposit, making it much easier for new buyers to make their first property purchase. To compare, this would bring the deposit on a £350,000 property down to £17,500. If you’re buying a house with a partner, this sized deposit seems much more reasonable.

These mortgages will still be subject to all the usual lending criteria and will likely limit your choice of lender. Currently, the scheme is set to run until December 2022, so plenty of time at this stage to consider it as an option, so plenty of time at this stage to consider it as an option. That said, time flies and we are already heading into February, so get your skates on if this is your best bet for affording to make a purchase. .

What is the First Home Scheme?

Another new government scheme introduced to help people onto the property ladder is the First Home Scheme. This scheme offers properties at a 30% discount (and in some areas as much as 50%) to typical market prices to first-time buyers whose household income does not exceed £90,000 in London, and who will be mortgaging at least 50% of the purchase.

This is a relatively new scheme with new developments being added to the offerings across the country in the coming months. For more information, visit

First-time buyer top-tips

  • Get your finances in order - ensure that your credit rating is solid, pay your bills on time and try to reduce your debts
  • Get pre-approved - make the effort to get a pre-approval in place for your borrowings to best-place you to act quickly when the right property comes along
  • If possible, visit several estate agents in the areas you want to buy in, and ensure that they know what you’re looking for and what your budget is, so they can contact you as soon as anything relevant comes on the market
  • Consider shopping below your maximum budget so you have some negotiating power to compete with other buyers when you find the right place
  • Stay organised - sellers want a smooth transaction, so the more efficient and reliable you are the better

Final thoughts

Yes, buying your first home can be a daunting prospect, but an exciting one, too! As with many things in life, the more organised you are, the better.

Getting your finances in order and establishing a realistic budget comes first. As restrictions ease and some degree of normalcy returns to London life, the demand for properties may rise further, so if the capital property market is calling you, get cracking! There are still some great deals to be had, and with the mortgage-guarantee scheme still in place, there’s a lot on your side as a first-time buyer in London.

If you are a first-time buyer then check out our wide range of London properties for sale! Or, if you’re thinking of moving, find out how much your home is worth with our online property valuation.

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25 March 2022
I think this is one of the most significant pieces of information for me. And Im glad read your article. Thank you for sharing!
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