First-time buyers' guide
Free PDF guide for first-time buyers
Thinking of buying your first home? It's an exciting but complicated venture – and the pandemic hasn't made it any easier. Our 55-page guide has tips on everything from putting together a deposit to knowing different mortgage types, from finding yourself a broker to getting the top deals. Free to download as a PDF, our guide takes you through ALL the key issues.
First-time buyers' mortgage guide 2022
Need to know the difference between a fixed and a variable mortgage?
Not sure what the definition of loan-to-value is?
Or want to know what help is available for first-time buyers?
Our guide explains it all, and will give you more certainty when it comes to starting off on the mortgage hunt.
Who's the guide for?
The guide's written for first-time buyers and tells you all you need to know about getting a mortgage on your first home. A first-time buyer is somebody who's never owned a property either in the UK or abroad before, though if you're a previous homeowner who's looking to get back onto the property ladder, then you should also use this guide.
If you've already got a mortgage and want to cut its cost, consolidate debts or change the deal, read the Remortgage guide instead.
What's in the guide?
If you're a first-time buyer and want a sneak peek of this guide before getting the whole thing, we've got a quick breakdown and intro for each section...
Is getting a mortgage right for you? Can you really afford it, or will you struggle to make each payment? Remember – renting isn't a dirty word. If it's either continuing to save up, or overstretching and having your first home repossessed – it's a no-brainer. This chapter also covers:
- Doing a money makeover and working out what you can afford each month.
- Using our Ultimate Mortgage Calculator to gauge how much a mortgage will cost you.
- Why lenders tend to cap how much you can borrow at between four and five times your salary, including the need to stress-test you in case mortgage rates shoot up to 7-8%.
Chapter 2: Typically you'll need a 10% deposit to buy a property... but there's help available if you've got less than that
While 95% mortgages have been making a comeback in recent months, interest rates have always got significantly cheaper if you've got at least a 10% deposit, which our full guide explains. That said, there is help available if you've only got a small deposit. This chapter covers:
- Why the size of your deposit matters and how having a smaller loan-to-value (LTV) gets you cheaper mortgage rates.
- Help available for first-time buyers with a small deposit, including the 95% mortgage guarantee scheme, shared ownership, Lifetime ISAs and the Help to Buy Equity Loan.
- How guarantor and mates' mortgages work.
The days when lenders offered mortgages willy nilly are long gone. Getting the best mortgage deal doesn't just need a decent deposit, you now need a good credit score too. You can boost your score by:
- Getting on the electoral roll.
- Checking your credit file (for free).
- Not missing payments; keeping credit applications down.
We've got the full lowdown on increasing your mortgage hopes in our full First-time buyers' guide. Plus also check out our specific Boost your mortgage chances guide and our top tips on how to improve your credit score.
Once you're confident that a lender will lend to you, you'll need to consider what kind of mortgage you actually want. Our full guide explains exactly what a mortgage is, how it's 'secured' on your home, and lays out the pros and cons of different mortgage types, including:
- Repayment and interest-only mortgages.
- Fixed-rate and variable-rate mortgages.
- Offset and current account mortgages.
If you're self-employed or a contractor, then getting a mortgage is tough as you need cast-iron proof of what you earn. It's easier for employees – they have payslips, but it's much tougher if you work for yourself or don't have a permanent contract.
In this chapter, we tell you what a lender will want to see before they offer you a mortgage, which'll include business accounts and tax returns.
Make sure when you do the sums, you add the full costs of buying a house and mortgaging. You can try to minimise them, but you can't magic them away. This chapter tells you what to budget for, which includes:
- Mortgage fee: Charged by the lender for taking out the mortgage – typically around £1,000.
- Valuation fee: Lenders charge this to see how your property's worth – typically around £250.
- Solicitor fee: To cover the cost of all the legal work involved. Budget for £500-£1,500.
- Stamp duty: A fee you pay to HMRC based on how much you're buying your property for. First-time buyers in England don't pay stamp duty on the first £300,000 of a main residential property.
For a full lowdown on what other costs you need to factor in, read the full First-time buyers' guide.
You've got two main options when applying for a mortgage, either doing it solo by going direct to the lender, or applying via a broker. Our full First-time buyers' guide sets out in detail how both options work, though using a broker is often the best bet as they can whittle down the top deals quickly, often have special deals only available via a broker and also know what type of mortgages would best suit your personal circumstances. This chapter includes info on:
- How different brokers work and which deals they search.
- Which brokers are free for you to use and what questions to ask them.
- How to compare the widest range of mortgages if going solo.
To compensate for lower profits on headline mortgage rates, some lenders have upped prices on associated insurance products. This chapter tells you the insurance policies you may face, the hard sell on, what you should expect to pay, and how to find the cheapest products. The kind of insurance to consider includes:
- Mortgage payment protection insurance
- Buildings and contents insurance
- Life cover
Will the lender lend on your property? What paperwork will you need to get together? How long should you get your mortgage to run for, and why is the APR useless? What about if you want to rent out your property in future? This chapter covers the answers to these and more questions you may have about buying your first home.
How come the guide's free?
The reason we're able to offer this guide for free is because it is sponsored by fees-free mortgage broker London & Country. But don't worry, it has no influence on the content, which purely depends on our view of the best way to get the cheapest mortgage deal you can.
The guide's written with complete editorial independence and it's purely focused on finding you the best deal. This was something we made sure was in the contract with London & Country.
Having said that, L&C isn't stupid. We've independently listed it as one of the top brokers for several years now (see our Cheap mortgage finding guide), so it had a pretty good idea it wouldn't come out too badly.
The reason it sponsors the guide is it gets a one-time chance to include its own message promoting its service. Just to assure you, you won't be sent any follow-up advertising or marketing, or any of that malarkey.
In the trade, this is known as a payment for 'lead generation', and in this case that means L&C pays for the publishing and a fee to this site. See more about this site's ethical financial stance.
Looking for more home-buying help?
We've got other guides and blogs to help if you're a first-time buyer looking to get onto the housing ladder...
- 95% mortgage guarantee scheme. A new scheme aimed at those with a 5% deposit.
- Help to Buy Equity Loan. Another option for those with a small deposit.
- Shared ownership. Buy a share of a property and pay rent on the bit you don't own.
- 10 things we learned about buying our first homes during the coronavirus pandemic. A blog written by members of the MSE team.
- Remortgage guide. How to get prepared for remortgaging.
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