First-time buyer FAQ

First-time buyer? Here’s what you need to know

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Buying a home for the first time? It can be tricky knowing where to begin. There’s plenty you need to know about getting on that first rung of the property ladder

Ready to learn more about first time buyer mortgages?

How do I apply for a mortgage?

You’ll need to have:

  • Proof of your address, such as a utility bill or bank statement
  • Proof of ID, such as a passport or driving licence
  • Proof of income, which is normally your last three payslips.

Most lenders will also require you to be at least 18 years old, but according to MoneySuperMarket data taken in October 2019, the average first-time buyer is 32.

You can search for mortgage deals online using our site. We’ve partnered with leading mortgage broker London & Country to ensure you find the right deal. If you prefer, you can call them free on 0800 073 2311.

The success of your application and the terms of the deal you are offered will be affected by your credit score. You can check yours for free with our Credit Monitor, and we can also give you information and tips on how to improve your score.

How much deposit do I need for my first mortgage?

The minimum deposit lenders will generally accept is 5% of the property value. These are known as 95% mortgages, and if you want one of these your options may be limited.

This is because most lenders prefer to ask for at least 10% of the property value as a deposit. However, the average deposit for first-time buyers is £50,174 using MoneySuperMarket, which is roughly 18% of the value of the properties they buy. The more you’re able to save up, the more – and better – mortgage deals you’ll have to choose from, with lower interest rates available in return for larger deposits.

How much can I borrow?

The average loan amount for first-time buyers on MoneySuperMarket is £176,693. The amount you’ll be able to borrow will depend on your current debts, outgoings and incomings. Lenders look at your salary in the following way:

  • For single applicants, they’ll usually lend you four times your annual salary
  • For joint applicants it’s generally three times the joint salary or four times the first salary plus the second salary.

However, the Financial Conduct Authority’s Mortgage Market Review means lenders also factor in your personal expenses, such as bills, debts and childcare.

This means they’ll have a more accurate picture of how much you can afford, but also the more of these outgoings you have, the less you’ll be able to borrow. Lenders need to know you can afford to repay the loan.

How home-buyers fund their purchase

According to MoneySuperMarket data correct as of October 2019

How long can I borrow for?

Mortgages come in different terms, ranging from five years to 40, but it’s common to see mortgages which last for 25 years. In fact, the most popular mortgage term for first-time buyers is between 21 and 30 years, according to MoneySuperMarket data.

However, a longer mortgage may allow you more flexibility. Long-term mortgages generally mean you’ll pay less each month, and if your deal allows overpayments it could work to your advantage.

You’ll be able to overpay when you can afford to, cutting down the mortgage term as you do, and if things get tight financially you can go back to your lower payments. However, these mortgages may also come with higher fees and less favourable interest rates, so it’s always worth comparing your options.

How much will my first mortgage cost?

The cost of your mortgage depends on how much you borrow, the interest rate you borrow at, and how long you’re borrowing for. You can work out how much your mortgage will cost with our mortgage calculator.

The average loan value of each type of mortgage

According to MoneySuperMarket data correct as of October 2019

How much stamp duty will I pay for my first mortgage?

As a first-time buyer you won’t pay stamp duty on the first £300,000 on properties that cost up to £500,000, and you’ll pay 5% on the portion between £300,001 and £500,000.

However, for homes costing over £500,000 you’ll pay the same as someone who has bought before:

  • For the first £125,000 the rate is 0%
  • From £125,001 to £250,000 the rate is 2%
  • From £250,001 to £925,000 the rate is 5%
  • From £925,001 to £1,500,000 the rate is 10%
  • From £1,500,001 and upwards the rate is 12%

Are there any other costs included in my mortgage?

You should also factor in any potential fees and charges included in the mortgage deal, as these can often be quite high. They won’t be the same for everyone, but they can include:

  • Arrangement fees
  • Booking fees
  • Valuation fees
  • Survey fees
  • Legal fees

Read more with our guide to the cost of buying your own home.

How much people pay towards their mortgage each month

According to MoneySuperMarket data correct as of October 2019

What will lenders want to know about me?

In order to decide whether you qualify for a mortgage deal, lenders will generally want to know about your incomings and outgoings. This helps them see whether you’d be able to afford to take out a loan.

Like with any kind of loan, they’ll also look at your credit report. This can sometimes be an issue for first time buyers who haven’t had enough time to build a decent borrowing history.

However there are things you can do to strengthen your credit report, such as taking out a credit card and using it responsibly – learn more with our guide to improving your credit score.

What types of mortgages are there?

There are different mortgage types designed for people in different situations. One of the main distinctions is on how you pay your mortgage:

  • Repayment: Repayment mortgages mean each monthly payment chips away at the total loan amount, including the original sum plus interest. Most mortgages are arranged on a repayment basis these days
  • Interest-only: Interest-only mortgages are when you only pay the interest on the loan during the term, then make a one-off payment at the end to pay off the original sum

You can also choose between different interest types:

  • Fixed-rate: Fixed-rate mortgages mean the interest rate you pay at stays the same for a certain period of time
  • Variable-rate: Variable-rate mortgages have an interest rate that can change when the lender decides to change it. This means it can go up or down, depending on economic conditions
  • Tracker: Tracker mortgage interest rates can also change, but they’re normally attached to another interest rate – usually, but not always, the Bank of England base rate

For more information on mortgage variations, read our guide to different types of mortgage.

The most popular mortgage term lengths

According to MoneySuperMarket data correct as of October 2019

Can I get a mortgage with someone else?

Most lenders also offer joint mortgages, which can come in two different forms:

  • Joint-tenancy: Joint-tenancy mortgages are when two or more people have equal rights to the property being bought. If one tenant were to pass away, their share would go to the other tenant(s)
  • Tenants-in-common: Tenants-in-common mortgages are when two or more people take out a mortgage but the split isn’t legally required to be equal on all sides. In this case, tenants can leave their part of the property to someone else in their will

For both types of joint mortgage, if one tenant wanted to sell the house, all tenants would have to agree.

Can I get help buying my first home?

The government backs a Help-to-Buy scheme that offers assistance for people looking to get on the property ladder. A number of UK banks participate in the scheme, but you’ll need to find a Help-to-Buy agent in your chosen location to get things started.

You can also apply for a Help-to-Buy ISA, which can be useful in helping you save up a deposit for your mortgage. These are only available to new savers until 30 November 2019 but plans bought before that date will remain active (and will accept contributions) until 30 November 2029.

What is a mortgage broker?

Mortgage brokers have access to an array of mortgage deals – some of which aren’t available to the general public. They can look for and organise mortgages on your behalf, and while they usually charge a fee it can sometimes be worth it due to the savings you could make.

If you want to use a mortgage broker, you should always make sure they or their organisation should be authorised by the Financial Conduct Authority. Learn more with our page on mortgage brokers.

MoneySuperMarket’s chosen mortgage broker partner is London & Country.

What is a mortgage guarantor?

A mortgage guarantor is someone who legally agrees to cover your mortgage payments if you can’t. This can be useful for people who want to help their family members, such as children or grandchildren, get on the property ladder.

Lenders may ask you to provide a guarantor if you don’t have enough of a deposit, or if you have a poor/thin credit file – read more in our guarantor mortgage guide.

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