FAQs for first-time buyers

Making the decision to buy a new home is incredibly exciting and nerve-wracking at the same time. Even more so when you are a first-time buyer. When it comes to researching and applying for your first mortgage, there are some frequently asked questions and we’re here to help.

How much can I borrow?

Mortgage lenders will assess your income and how much you can afford to repay when deciding how much you can borrow.

Most lenders will be prepared to lend 4.5 to 5 times the annual income of the mortgage applicants. For example, a single applicant earning £30,000 a year can expect to be able to borrow £135,000 to £150,000. If the application is for a couple who both earn £30,000 a year, then you could potentially borrow up to £300,000.

Lenders will also take into consideration your ability to repay the mortgage each month. If you already have monthly payments due on a personal loan, car finance, a credit card or other regular expenditure, this will impact how much you can borrow. You will generally need to supply three months bank statements as part of the application process so this expenditure can be reviewed.

What deposit do I need?

Saving for a deposit requires a big effort for most first-time buyers. Currently there are several lenders who will lend to you if you have a 5% deposit, subject to other criteria. If you have a larger deposit, you are likely to have access to more lenders and potentially better interest rates as you represent less of a risk to the lender.

It’s also important to remember that during the process of buying your first home you will have other costs. You’ll need to budget for legal expenses, a survey of your potential purchase, stamp duty and moving costs. Hopefully leaving a bit of money for a trip to Ikea once you’ve moved in as well!

What is the process for getting a mortgage?

The first step to securing a mortgage is to get a Decision in Principle (DIP). This is confirmation from a mortgage lender that they may be able to lend you a certain amount of money for a mortgage. It's also known as an Agreement in Principle.

It’s a good idea to get a DIP before you start looking for a home. It can help you know your budget and can show estate agents and sellers that you're serious about buying.

A DIP is not legally binding, and the amount offered could change after a more detailed assessment. A DIP typically lasts 30–90 days, but you can usually extend it if your circumstances don't change.

Once you’ve found your dream home and had an offer accepted, you’ll need to formally apply for a mortgage. The lender will require proof of your income and expenditure and information about the property you are purchasing. Subject to this all being satisfactory, you will receive a mortgage offer which will allow you to complete the purchase.

Is there anything else to think about?

Lenders will assess your credit score, employment history, and potentially a number of other areas, so try to bear this in mind. A consistent job history, limited use of your available credit, and being registered on the electoral roll will reduce the risk to the lender of offering you a mortgage.

Who can help?

We can! Using a mortgage broker with access to a wide range of lenders isn’t just about finding the right mortgage for you. We’re here to help you through the entire process, from advising on the steps you can take to before applying for a mortgage, to sourcing the right product for you and completing the application, we’re on your side.

If you’d like more information, simply get in touch, or download our budget and new property planner checklist to help you get started.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

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