First Time Buyer

Buying a house is usually ranked as one of the most stressful things you will ever do, not least when you’re a first time buyer. It can be daunting, especially if you feel like you don’t know what’s going on.

We’ll talk you through the process of buying your first home, from the moment you think about purchasing to the second you get the keys (and beyond!).

Six steps to buying a home as a first time buyer

1. Chat with us

Before you start house-hunting, it’s crucial to understand your financial situation and how your circumstances impact the kind of mortgage you might be able to get.

We can help you calculate a budget, understand all the costs involved, and check your credit report. We’ll also give you guidance on anything else you need to do in order to be mortgage ready.

2. Get a Decision in Principle

When you’re ready to start looking at houses, we’ll research suitable lenders and apply for a Decision in Principle on your behalf. Also known as an Agreement in Principle or Mortgage in Principle, this is a basic assessment done by the lender to determine whether or not they are likely to lend you some money. It isn’t a full mortgage offer yet but getting a Decision in Principle is a good start.

You’ll get a certificate to show how much the lender will consider you for. It also evidences that you’ve passed the initial credit check. It shows estate agents that you’re in a good position to buy.

3. Go house-hunting (the fun bit!)

Now you have an idea of what you can afford, it’s time to scour property listings in search of your new home. Keep an open mind; your first house doesn’t have to be your forever home.

Once you’ve found somewhere you’d like to buy, put an offer in and keep your fingers crossed! Hopefully it will be accepted.

4. Apply for the mortgage and insurances

We do this bit so you can rest assured you’ve got the right mortgage deal and insurance package for your circumstances.

This is when the lender will review your documentation and value the property. If they’re happy both with you and with the house, they’ll issue a mortgage offer.

We’ll then look to protect you and your family against the financial impact of death and illness so that no matter what happens, you can keep the roof over your head. Discover more about life insurance, critical illness cover, and income protection on our dedicated pages.

5. Work with your solicitor

From the initial paperwork all the way through to completion, your solicitor is key. They’ll check over all the documentation related to the house and query anything that might cause you problems in the future. When they have all the information they need and they’re happy with everything, they can look to agree a date for you to become the owner of the property.

6. Become a homeowner!

Pay your deposit, the mortgage starts, and you get the keys – congratulations! Find out more about what to do after you get the keys.

How do first time buyer mortgages work?

A typical repayment mortgage works in exactly the same way as a loan: you borrow a set amount from a lender, over a defined period of time (known as the term). Each month you make a payment until the entire amount has been repaid.

Banks won’t lend you money for free – you can’t borrow £200,000 and expect to pay £200,000 back. In order for them to make money, and to make it worth their while to lend, banks charge interest. Your monthly payment consists partly of interest with the remainder going towards repaying what you owe. Every month the total amount you owe the bank drops.

If you make all of your payments in full and on time, you’ll pay the bank back everything that you owe them plus the interest they have charged. The house will then be completely yours.

This is the standard method of borrowing to buy a house that you will live in.

Interest-only

With interest-only mortgages, however, you borrow a set amount from the bank over a defined period of time. Each monthly repayment consists purely of interest charged by the bank. The amount you have borrowed is not being paid back each month.

Instead you have to prove that you will have the money at the end of the mortgage term, which could be years away. This can be through things like pensions and investments.

You also usually need a significant level of deposit and a high income (circa. £100,000 a year, though there are exceptions) before lenders will even consider an application from you on an interest-only basis.

Can I get a mortgage as a first time buyer?

Assuming that you receive an income and do not have any missed payments or defaults against your name, you should be able to get a mortgage. There are mortgages available for people with some bad credit, too. Every application, however, is assessed individually.

When making an application, a lender will look at your employment history and whether you can afford the repayments. They will also consider personal details such as age and credit score, as well as details of the property and mortgage. Every lender has different criteria and will use their own credit scoring system.

While credit scoring systems can be complex, this also means that even if you have been turned down for one mortgage, you can apply with a different lender and potentially see a different result.

We can help you determine which lenders may be suitable for your current situation.

How much can I borrow on a first time buyer mortgage?

That depends entirely on your personal circumstances.

Lenders undertake a thorough assessment of your income and expenditure in order to reach a figure. They factor in things like student loans, childcare, and maintenance payments as well as credit cards and personal loans.

Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible. If your case doesn’t fit with one lender, it might fit with another.

This is where a mortgage broker like us comes in handy. Our job is to know the lenders’ criteria and to match you up with someone who will consider you. We can compare deals from dozens of lenders, too, so you know you’re getting the best possible mortgage for you.

What will my monthly mortgage payments be?

Your monthly repayments will vary according to the total amount you borrow, the term of your mortgage, fees accrued, and the interest rate. Twenty-five-year mortgages used to be considered standard, and while this term does remain popular, it is possible to borrow over a longer or shorter period, which will increase or decrease your repayments.