Getting on the property ladder is much easier if you know what help is available, where to find a mortgage and how to apply for a mortgage. Here is everything you need to know about how to get a mortgage and buy your first home.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
It can be daunting applying for a mortgage: there are a lot of forms to fill in and a lot of information to provide. Add in the anticipation and urgency of buying your first property and applying for your first mortgage can seem overwhelming. But with some simple planning and a bit of organisation it need not be stressful.
You’ve found a home you want to buy. If you’ve never applied for a mortgage before, you can apply for a first time buyer mortgage. But there are some things you will need to do before you start the mortgage application process:
Find a mortgage using our first time buyer comparison table
Case Study - John's experience
Really easy to get your head around it. I'm a first time buyer and I was ignorant on the subject of mortgages, fixed and variable rates etc. After spending an hour or so and doing a few figures I was able to determine what was the ideal mortgage for me, and what was the best interest rate the banks or building societies were offering. I am able to calculate and budget for my up and coming first house. If I can do it, you can!
John McCartan, from Trustpilot
To be eligible for a mortgage you will normally need to be in permanent full time employment, have saved a deposit, and have a good credit rating. Lenders will also check:
How much you earn
If you can afford the mortgage repayments
Your regular outgoings
Your existing debts
The value of the property you want to buy
If you are applying on your own, or jointly
Before you apply for a mortgage, it can be helpful to work out how much you can afford to borrow. You can apply for a mortgage agreement in principle ahead of making a mortgage application, which can provide an indication of what you may be offered by a lender. You can find out more about a mortgage in principle here.
Yes, but you will need to earn enough money to cover the cost of your monthly mortgage payments. Mortgage lenders will determine your affordability based on your income and expenses, therefore you will need to show that you earn enough money to repay your mortgage.
It may also be harder to save up for a deposit alone, and you may not be able to borrow as much as you would if you applied for a joint mortgage with a partner, friend or family member.
Each lender has specific mortgage requirements and often, lenders consider it riskier to give you a mortgage as a first time buyer because you may have:
No experience holding a mortgage, which means the lender will not know how well you will keep up with repayments.
Less credit history if you are younger or have never held a mortgage before. This will give lenders less information when they check your credit record.
A smaller deposit saved to put towards the house purchase.
No equity in a property you own already to put towards the new mortgage.
The higher your deposit, the easier you will find getting a mortgage as a first time buyer. A smaller deposit means your mortgage will have to cover more of the property's total price.
For example, if you saved £20,000 for a deposit on a £200,000 home, this would cover 10% of the cost. You would need a mortgage for the remaining £180,000, meaning its loan to value (LTV) is 90% of the purchase price.
However, fewer mortgages are available with a high LTV, and the deals you can get usually have higher interest rates and upfront fees.
You can get first time buyer mortgages with an LTV of up to 95%. There are some 100% mortgage deals available with no deposit, including guarantor mortgages, which require a family member or friend to be named on them.
You can apply for most types of mortgage, but some are designed to accept first time buyers, even if you have a small deposit.
Some mortgages are only available for first time buyers and can come with high LTVs, meaning you would only need a deposit of 5% or 10%.
These allow you to buy a property with a small deposit, and some mortgage deals are available with an LTV of 100%, meaning you will not need a deposit at all.
A family member or friend will have to agree to be named on the mortgage and to cover your repayments if you miss them. They will have to guarantee the mortgage payments with either:
Their own property, which could be repossessed if you fell too far behind on your repayments
Their savings, which the lender will hold in a savings account until you have paid off a percentage of your mortgage
Help to Buy is a government scheme that can help you get a mortgage with a small deposit. They offer equity loans, which lend you money you can use towards your deposit and repay later. They are interest free for five years and can cover 20% of the purchase price (40% in London). You will need to save a 5% deposit yourself. You can find out more about the scheme or compare Help to Buy mortgages to find the right deal.
The Forces Help to Buy scheme was introduced in 2014 to help members of the armed forces get on the property ladder. It lets you borrow up to 50% of your salary (with a maximum of £25,000) interest free to help you buy a home.
Find out more if you are eligible on the GOV.UK website.
This lets you buy your council house if you have lived there for more than three years. You can get a discount of up to 70% off the price, and some mortgage lenders let you use this discount instead of a deposit.
You can use a Shared Ownership mortgage to buy between 25% and 75% of a property. You can buy further shares in your property until you own all of it.
These mortgages can come with much smaller repayments and deposits than if you buy 100% of a property. However, you will also pay rent to your local authority or a housing developer who owns the rest of your home as well as your mortgage payments.
New build developer loans
Some property developers offer loans if you buy a new home from them. They will often lend you enough for your mortgage's deposit.
If they lent you 20% of the purchase price over 15 years, you would need to save up to pay back their loan as well as make repayments on your mortgage.
Buying your first home in Northern Ireland
You can apply to buy shared equity in your home in Northern Ireland if you are a tenant of a housing association or the Northern Ireland Housing Executive (NIHE).
You can also buy property in Northern Ireland:
With a discount on the purchase
Using their Rent to Own scheme
Using their shared equity scheme
You can find out more on the nidirect website.
Before you consider applying for a mortgage, you will need to check whether you can afford the following costs:
A mortgage is a huge commitment so you need to make sure you are prepared for the expense and expenses involved. You can work out if buying a house is in your budget using our guide on how much buying a property will cost you. You should also think about getting an income protection policy, which pays you a monthly income if you were unable to work for a prolonged period of time.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.