First-time buyers’ guide to mortgages

There’s nothing like buying your first home. It’s an exciting time, and it’s also a huge financial commitment. You want to make sure you’re fully prepared for the financial aspects of home ownership—including finding the right mortgage. In this first-time buyers guide, we’ll take you through all the steps of buying a house and finding a mortgage.

With the right advice, you can avoid pitfalls and make the right choices when buying your first home.

The first step to buying a home

Surprise – it’s understanding the basic concepts of a mortgage! You will need to know what you can afford, whether or not you are getting the best deal and what sort of advice you need from your lender.

Before applying for a mortgage, you must understand how different types of mortgages work and what each option will mean for your income and lifestyle.

Mortgages explained

A mortgage is a loan secured against a property, which you will pay back over time. When you take out a mortgage, you are borrowing money from the bank and then repaying them over the term of your loan. There are two common types of mortgages:

Fixed Rate Mortgages and Variable Rate Mortgages.

Fixed Rate Mortgages: A Fixed Rate Mortgage is a mortgage that has an interest rate that does not change for the duration of your loan. This means you can easily budget and plan with confidence knowing exactly how much your monthly payments will be.

Variable Rate or Tracker Mortgages: Variable Rate or Tracker Mortgages are mortgages that have an interest rate that can change over time depending on economic conditions. If you are someone who wants the flexibility to make additional payments, or if you feel you may move within the next few years, then a variable rate mortgage could be for you.

There are many different mortgage products available to first-time buyers. For example, there are government-backed schemes such as help to buy (HTB) or lifetime ISAs (LISA). It’s important that you speak to a mortgage adviser before deciding what type of scheme is best for you.

Your deposit

The size of your deposit will largely influence how much you can borrow, and therefore the mortgage rate that you get.

The minimum deposit is usually 10% of the property value but can vary depending on your circumstances and the size of your loan. This is subject to change if you are using any government-backed schemes. You can also get some mortgages with just a 5% deposit.

A larger cash deposit is likely to mean a lower interest rate because the lender will see you as less of a risk.

If you have a smaller deposit, you may still be able to get a mortgage, but it might cost more. You might also have difficulty getting accepted in the first place as your choice of lenders will be limited by the size of your deposit.

There are lots of parameters that can affect the deposit you need.

Understanding affordability as a first-time buyer

Understanding affordability is one of the most important things you need to know before you buy a home.

It’s also one of the most complex and confusing parts of buying a home.

But don’t worry – we can help!

Affordability is the ability to pay for your mortgage. It’s a complex calculation based on your income, outgoings, and the size of your deposit. Everyone has different circumstances which mean that affordability is different for everyone. Affordability is a moving target: it can change over time as you earn more or spend less.

Finding the best deal

There are two ways you can get a mortgage: either directly from a lender, or through an intermediary like us.

The average first-time buyer will typically go through a mortgage adviser to save time and money. You may have had this conversation with friends or colleagues before – why would anyone hire someone to do something that they could do themselves?

Well… let us explain!

As independent mortgage advisers, we can access a wide range of mortgage deals. Our team of mortgage advisers know what is available, who the best lenders are for different circumstances and which deals fit each situation. But not only does this save you time, but it also allows you to find out about special offers that may only be available through intermediaries. Our team of dedicated mortgage advisers will complete the entire mortgage process from start to finish on your behalf. Did we also mention that we’re completely free? We don’t charge our UK clients any fees for advice or our broker services. Like other mortgage advisers, we’re paid commission straight from the lender, saving you money during an already expensive process!

How do I apply for a mortgage?

Find a mortgage adviser who can help you find the right mortgage.

Mortgage advisers are professional and qualified brokers who work with banks and other lenders to get the best deal for their clients. When we assess your financial situation, we’ll give you advice on how much house you can afford to buy. We’ll also compare different types of mortgages so that you can make an informed decision about which type is best for your situation and goals.

Our team of advisers are highly experienced in working with first-time buyers and guiding you through the mortgage process.

Liked the first-time buyers guide?

Mortgages can be complex and confusing. The best advice is to get independent financial advice from a specialist mortgage adviser who will find a product that suits your circumstances.

If you’ve read our first-time buyers guide and want to learn more, please get in touch.