FIRST-TIME BUYER MORTGAGES
No obligation to proceed.
Your home may be repossessed if you do not keep up repayments on your mortgage.
THE PROCESS
01
Work out your finances
Consider the deposit you have available, your income, existing commitments and the monthly housing costs you may be comfortable with.
02
Understand your mortgage options
An adviser can discuss your circumstances and explain mortgage options that may be available to you.
03
Get ready to make an offer
Understanding your likely borrowing position can help you approach your property search with more context.
04
Make an offer
If you find a property you want to buy, you can make an offer through the seller or estate agent.
05
Mortgage application & legal work
If your offer is accepted, the mortgage application, lender valuation and legal work can progress.
06
Exchange & completion
Once the necessary mortgage and legal requirements have been satisfied, contracts can be exchanged and the purchase can proceed to completion.
Every purchase can be different
The exact process and timing can vary depending on the property, the seller, the lender and the legal work involved.
A mortgage adviser can explain the mortgage stages, while your conveyancer or solicitor handles the legal work involved in the purchase.
YOUR DEPOSIT
PROPERTY PRICE
The agreed price of the home
This is the amount agreed with the seller for the property you are buying.
YOUR DEPOSIT
The money you contribute
Your deposit forms part of the purchase price and reduces the amount you need to borrow.
MORTGAGE REQUIRED
The amount you need to borrow
The remaining amount will usually need to be funded by your mortgage and any other agreed sources of funds.
What is loan-to-value?
Loan-to-value, often shortened to LTV, compares the amount of the mortgage with the value or purchase price of the property. A larger deposit generally means a lower loan-to-value.
LARGER DEPOSIT
Lower proportion borrowed
SMALLER DEPOSIT
Higher proportion borrowed
Why can the deposit matter?
The size of your deposit and resulting loan-to-value can affect the mortgage products and terms that may be available. Individual lender criteria vary.
A larger deposit generally results in a lower loan-to-value, but the mortgage options available will also depend on your wider circumstances and the lender’s criteria.
Explore deposits & loan-to-value →
MORTGAGE AFFORDABILITY
There is no single factor that determines how much you can borrow.
Income
How much you earn and how your income is structured can affect a lender’s assessment.
Regular commitments
Loans, credit commitments and other regular expenditure may be taken into account.
Deposit
Your deposit affects the proportion of the property’s value that you need to borrow.
Credit history
Lenders may consider your credit history as part of their lending decision.
Mortgage term
The length of the mortgage can affect monthly payments and the assessment of borrowing.
Property
The property itself must normally meet the lender’s requirements.
Lenders use their own criteria
Different lenders can assess the same circumstances differently, and their criteria may change over time. An adviser can consider your circumstances and explain options that may be available.
The lender will ultimately decide whether it is prepared to lend and how much it is prepared to offer.
Explore mortgage affordability →
BEFORE YOU MAKE AN OFFER
A mortgage agreement in principle — sometimes called a decision in principle — is an indication from a lender of how much it may be prepared to lend based on certain information provided at that stage.
What it can help with
It can provide useful context when searching for a property and may help demonstrate to an estate agent or seller that you have considered your mortgage position.
Property search — It can give you some context for the price range you are considering.
Making an offer — An estate agent or seller may ask whether you have considered your mortgage position before accepting an offer.
Preparing for the next stage — It can help you move towards a full mortgage application once you have found a property.
What it does not mean
An agreement in principle is not a mortgage offer and does not guarantee that a lender will approve a full mortgage application.
Not a mortgage offer — The lender has not yet made a final offer to lend on a particular property.
Not guaranteed borrowing — The amount indicated can change when the lender carries out its full assessment.
Not final property approval — The property itself will normally need to meet the lender’s requirements.
A full application involves further checks
The lender will normally carry out further assessment of your circumstances and the property before deciding whether to issue a mortgage offer.
AGREEMENT IN PRINCIPLE
↓
FULL MORTGAGE APPLICATION
↓
LENDER DECISION
Each stage involves a different level of assessment.
BUDGETING FOR YOUR PURCHASE
MORTGAGE-RELATED COSTS
Mortgage product fees — Some mortgage products have arrangement, booking or other product fees. The way these are paid can also affect the overall cost.
Valuation costs — A lender may require a valuation of the property. Whether there is a charge, and the type of valuation provided, can vary.
Mortgage advice fees — A mortgage adviser may charge a fee for providing advice. The adviser should explain any applicable charges before you proceed.
Buildings insurance — Your lender may require suitable buildings insurance to be in place from an appropriate point in the purchase process.
PROPERTY & MOVING COSTS
Legal & conveyancing costs — A conveyancer or solicitor will normally carry out the legal work involved in buying the property.
Property survey — You may choose to arrange a property survey that goes beyond any valuation carried out for the lender.
Stamp Duty Land Tax — Stamp Duty Land Tax may apply to a property purchase in England and Northern Ireland depending on the transaction and your circumstances.
Moving costs — You may also need to allow for practical costs associated with moving into your new home.
Your deposit is only part of the budget
When planning your purchase, consider the other costs you may need to pay rather than assuming all available money can be used as your deposit. Which costs apply, and how much they are, will depend on the property, the mortgage and your circumstances.
MORTGAGE STRUCTURE
A mortgage has several features that can affect how your borrowing works over time. Understanding the differences can help you prepare for a conversation with an adviser.
INTEREST RATE
Interest rate structure
Mortgages can use fixed, tracker or other variable interest rates. The structure can affect how and when your payments may change.
Fixed rate — The rate is normally fixed for an agreed initial period.
Tracker or variable rate — The rate may change over time, which can affect your payments.
Explore fixed and variable rates →
REPAYMENT
Repayment method
With a repayment mortgage, payments normally reduce the amount borrowed as well as paying interest. Interest-only borrowing works differently and requires an acceptable repayment strategy.
Repayment — Payments normally include both interest and repayment of the capital.
Interest-only — Regular payments normally cover interest, with the capital requiring repayment separately.
Explore mortgage repayment options →
TIME
Mortgage term
The mortgage term is the period over which the borrowing is arranged.
Monthly payments — The length of the term can affect the amount of the regular mortgage payment.
Overall borrowing period — A longer or shorter term changes the period over which the mortgage is repaid and can affect the overall interest paid.
These features work together
The interest rate structure, repayment method and mortgage term can all affect how a mortgage works. An adviser can explain how different features may apply to the mortgage options available for your circumstances.
THE APPLICATION
The information required varies, but lenders normally need enough information to assess you, your finances and the property. Having relevant information available can help you prepare for the application process.
The exact documents and information required can vary by lender and application.
ABOUT YOU
Proof of identity — A lender may ask for documents confirming your identity.
Proof of address — You may also be asked for evidence of your current address.
YOUR FINANCES
Evidence of income — The lender may ask for information or documents showing your income.
Bank statements or financial information — Financial information may be requested as part of the lender’s assessment.
Existing credit commitments — You may need to provide details of loans, credit and other financial commitments.
Your deposit — The lender may ask about the amount and source of the money being used towards the purchase.
THE PURCHASE
Property details — The lender will need information about the property you are proposing to buy.
Purchase information — Information about the agreed purchase and transaction may also be required.
Be prepared to explain where your deposit comes from
Your lender and conveyancer may need information about the source of your deposit, particularly where some or all of it has been provided by another person.
For example, where money is being provided by a family member, further information or documentation may be requested.
Your lender and conveyancer have different responsibilities and may ask for information for different reasons.
COMMON QUESTIONS
6 COMMON FIRST-TIME BUYER QUESTIONS
How much deposit do I need?
How much can I borrow?
Do I need an agreement in principle?
What happens after my offer is accepted?
Should I have a property survey?
Can family help with my deposit?
GUIDES & INFORMATION
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No obligation to proceed.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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