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Mortgage types

Mortgage guide for first-time buyers

If you are considering buying your first home, you’ll be excited, and possibly a little overwhelmed. Our guide is designed to assist you as you prepare to apply for your first mortgage, providing important information that you need to be aware of and answering any queries you may have.

Understanding mortgages

Mortgages are simply loans that homebuyers use to be able to purchase their property. It’s the property itself that is the collateral for the loan. Lenders need to be sure that they will get their money back.  

There are various types of mortgages available, including fixed rate and variable rate options.

How much the mortgage will cost will depend on how long it is due to run (this is known as its ‘term’), and the interest rate that is charged by the lender.

These rates can vary. It very much depends on the mortgage product you opt for and the applicant’s finances and situation. Generally speaking, the more prepared you are before you apply for a mortgage as a first-time buyer, the more eligible you are likely to be for deals and promotions.

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Did you know...

The vast majority of first-time buyers – no less than 87% - relied on savings as the primary source of their deposits in 2022-2023.

Benefits of working with a mortgage broker

Using a mortgage broker can help make buying your first home easier. Just some of the reasons include:

They know the market

With a professional understanding and insights into the housing market, they will have their finger on the pulse of current housing market trends, property values and available mortgage options for first-time buyers.

Access to a variety of lenders

A whole of market broker has access to lenders that you may not be able to uncover on your own. This means they are privy to deals you may not otherwise know about, so they can help you find the most beneficial mortgage rates and terms – the ones that are most suitable for you and your circumstances.

A personalised service

Their service will be tailored to suit your current financial situation and consider your plans and goals for the future. And it’s likely they will have helped a vast number of first-time buyers previously, so they will already have an understanding of typical worries or concerns.

Professional advice

A professional mortgage broker will have extensive knowledge of mortgage industry. They can assist you in all kinds of ways, helping you navigate the entire process, from your initial mortgage enquiry through to completion. They can even help with the documentation, submitting it on your behalf.

Assessing your financial situation

Before you even start thinking about looking at properties, it’s prudent to assess your financial situation. There is little point in setting your heart on a property, only to find you don’t have the funds to secure the mortgage you’d need.

Establishing what savings you have means you will be in a position to either search for the type of property you want, find ways to make up the shortfall or adjust your expectations on what you’re going to buy.

Reviewing your credit score is also crucial as lenders use this to decide whether you’re eligible for a mortgage. It shows them your financial history and subsequently, how good you are at making repayments. Checking your credit score is free to do and will give you a clear indication of where you currently stand. If your rating needs improvements, this will take time but will increase the likelihood of being approved for a mortgage. This means making sure you always pay bills on time and checking that all the details on your credit report are accurate and up to date.

Saving for a deposit

If you need to save more money for a deposit, set a realistic budget. Keep an eye on your spending habits and cut back where you can.

Making small sacrifices – like cancelling subscriptions, dining out, or even treating yourself to that daily cup of coffee – can help, but make choices that mean you’ll stick to your savings plan.

As a first-time buyer, there will be other considerations you are going to need to take into account. You’ll need somewhere to sit, and sleep, furniture to keep your belongings in, a kettle for that cup of coffee, and so much more. There are ways you can keep these costs down, such as buying second hand, nonetheless, you’ll need to save enough to be able to live comfortably.

Mortgage affordability

Affordability is the term mortgage lenders give to working out whether a buyer can afford a mortgage. When assessing this, they take many factors into consideration, such as:

  • salary and other income, employment history and stability.
  • debts. This could be student loans, credit card debt or car loans. And they’ll look at the ratio of debt-to-income. 
  • monthly expenditure, such as housing costs, food and other necessary expenses. 
  • credit score.


It’s important that you have a mortgage that you’re going to be able to comfortably pay back. The following tips may help:

  • Work out your monthly income and outgoings. 
  • Consider your debt-to-income ratio, i.e. what percentage of your monthly income goes towards paying debts. A ratio of 36% or less is more likely to get you a better deal on your mortgage. A lower ratio indicates to lenders that you can afford monthly payments.
  • Obtain a mortgage in principle before you begin looking at properties. You’ll get a good idea of how much you’ll be able to borrow and your potential monthly repayments. Lenders need to see proof of income, your assets and any debts before providing a mortgage in principle
  • Online affordability calculators are useful tools that can help you establish how much you can afford to borrow, taking your income into account.


Mortgage affordability is a complex process, made more difficult by lenders working to different criteria. A mortgage broker will know the various rules different lenders work to and can present your application to a panel most likely to suit your financial situation.

When looking at your own affordability, keep in mind your long-term financial aspirations.

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Types of mortgages

These are the following types of mortgage you might want to know more about:

Repayment

A repayment mortgage is where you repay the capital and interest you owe. Once completely settled, you will own your home. As a first-time buyer, you are most likely to get a repayment mortgage.

Interest-only

With interest-only mortgages, you only repay the interest on the loan. At the mortgage term end, you will still owe the total sum of the loan and, depending on your circumstance, you may need to sell the property to pay it off.

Fixed rate

This is where your interest rate and monthly payment remain the same for a set time, typically two, three, five, or ten years.

Variable rate

Variable rate mortgages can see interest rates fluctuate. They may appear a better deal but be mindful that they are riskier.

Checking your credit score

There are three main credit reference agencies in the UK: Experian, Equifax and Callcredit. Every agency has its own way of scoring, and idea of what constitutes a good score.

Experian and Equifax displays a score out of 999 and Callcredit, out of 5. The higher you score, the better your chance of being accepted for a mortgage.

Getting pre-approved

To get pre-approved:

  • Check your credit score
  • Collate relevant documents, such as bank statements, pay slips, tax returns and debts or assets information
  • Decide which lender is most suitable for you, or use an established whole of market mortgage broker who can help
  • Submit your mortgage application. Complete the application form and include the necessary documents

Finding a mortgage lender

If you’d prefer to approach lenders directly, you’ll need to research and compare which ones suit your financial situation. Look for one that is offering favourable terms and who offers a good level of customer service.

Making your application

The steps to making a mortgage application are:

  • Secure an Agreement in Principle
  • Start property-hunting
  • Make your formal mortgage application
  • The lender arranges a property valuation
  • Receive your mortgage offer
  • Appoint a conveyancer or solicitor
  • Exchange contracts
  • Completion

Understanding mortgage offers

If successful, you’ll receive a mortgage offer, usually valid for three to six months, which outlines interest rate, loan total and repayment terms and conditions.

Review this document to make sure you’re satisfied with everything.

Completing the purchase

On the agreed date of completion, your mortgage funds are transferred to the seller’s conveyancer. You are then able to collect the keys and begin enjoying your new home. 

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FAQs

When should I apply for a mortgage?

It’s prudent to apply for a mortgage before you even begin property hunting.

Will I have to pay stamp duty?

Stamp duty rules change often, so check the HMRC Stamp Duty rates or use a stamp duty calculator to see if and what you need to pay.

As a rule of thumb, first-time buyer properties fall under the threshold. Though, for more expensive properties, stamp duty will be payable.

How will I know if my mortgage application has been approved?

You will know your mortgage application has been successful on receipt of a formal mortgage offer.

Additional resources

We have various resources designed to help you, including our blogs, other guides and a range of mortgage calculators. If you’d like to discuss your mortgage options as a first-time buyer, contact us for individual advice.

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