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How to get a mortgage as a first-time buyer

Getting your first mortgage can feel daunting, but there are ways to help the process go smoothly. Improving your credit score as much as you can, having your documents and deposit at the ready and getting a mortgage in principle, can all help towards getting your first mortgage.

7 min read
couple moving into first home

What is a first-time buyer?

A first-time buyer is someone who’s in the process of purchasing their first property. They’ve never previously owned a freehold property or had a leasehold interest in a residential property in the UK, or abroad.

Can I be a first-time buyer again in the UK? 

Qualifying as a first-time buyer requires you to have never owned a property independently or jointly, so you cannot be a first-time buyer more than once. Even if you don’t currently own a property, you won’t qualify as a first-time buyer if you’ve owned one in the past.

7 things to do before applying for a mortgage 

1. Save up a deposit

This one might sound obvious, but it’s an important step. Bear in mind, you’re unlikely to be accepted for a mortgage if you use a personal loan to pay for your house deposit. Lenders may see you as too high risk to lend to because you’ll have to pay off the loan on top of your mortgage – which could affect your mortgage affordability.

While there are lots of options for getting help with buying your first home, you need to have a sizeable deposit to be able to start the process. Have a look at some of our top saving tips for advice on how you could boost your deposit.

2. Reduce debts and non-essential outgoings

No one said saving for your first home is easy. It takes time, effort and, sometimes, a bit of sacrifice. Reducing your spending on non-essential outgoings will help you to save. (Remember it isn’t just your deposit you’ll have to pay for when you buy your first home, there are other costs, too).

If you have outstanding debt, reducing it as much as possible will help when it comes to buying a house. Not just because you’ll have more money to put towards your house - but also because you’ll appear less risky to lenders.  

All mortgage lenders check your full credit report when you apply. If you have multiple debts this will show up, they may deem you as someone who relies too heavily on credit and reject your application as a result.

3. Fix any errors on your credit report 

Errors on your credit report can lead to credit applications, like mortgages, being declined. So, it’s essential that you check your credit report regularly, to make sure all the information on there is accurate and up to date. You can fix mistakes by contacting the credit reference agencies directly.

However, it isn’t enough to just check your credit report using one reference agency – you need to check all three. The three main credit reference agencies in the UK are Experian, Equifax and TransUnion. They may each hold different information about your finances. This is because some lenders report to certain agencies and not others.

You can check your Equifax credit report for free (for life) through CredAbility.

4. Register on the electoral roll

Something all lenders will take notice of on your credit report is whether you’re registered on the electoral roll. The electoral roll serves as a way to confirm your identity and address.

Being on there can boost your credit score (as it helps to prove that you are who you say you are). So, if you’ve signed up, it’ll will work in your favour when applying for a mortgage.

5. Gather your paperwork

There are quite a few pieces of paperwork you’ll need to have to hand for your mortgage application – here’s a quick breakdown: 

  • payslips – you’ll need to provide your last three months’ worth of payslips when applying for a mortgage. This shows lenders that you have regular income and confirms your earnings

  • P60 form – this shows the tax you’ve paid on your salary for the financial year (April to April) and gives lenders an overview of your earnings

  • UK passport or driving licence – you’ll need to provide a copy of at least one of these in order to confirm your identity

  • proof of address – this may be a selection of utility bills or council tax statements displaying your current address, to prove that you live where you say you do

  • recent bank statements – this provides evidence of your earnings as well as any credit repayments and regular outgoings

  • proof of deposit – it’s a legal requirement to disclose where your deposit has come from, so you must provide proof of this. This may be from a bank statement showing the amount available in your savings, or if a relative is providing it, a signed letter from them with a copy of their ID, for example

6. Compare mortgages

As with any kind of finance, it’s important to do your research and shop around. Different lenders will offer different interest rates, repayment periods - and even some incentives. So shopping around to find what’s best for you is essential.

It’s a good idea to use a mortgage calculator to help you work out how long you need to borrow for and how different interest rates will affect your monthly repayments. Once you have this information, you’ll be in the best position to compare mortgages. You can do this by: 

  • speaking to a mortgage adviser (some will offer initial conversations for free, but all will tell you if you’ll have to pay a fee or if they’ll take commission)
  • using comparison sites – many of these are free to use online and will tailor the comparisons based on the information you input
  • using a mortgage broker - they’ll be able to help find the best mortgage for you and be the helpful go-between, between you and your lender

7. Get a mortgage in principle 

A mortgage in principle (otherwise known as an agreement in principle) is the amount a mortgage company is willing to lend you in theory.

Getting one of these before viewing a property shows sellers and estate agents that you’re a serious buyer.

Applying for a mortgage in principle will usually involve either a ‘soft’ or ‘hard’ check on your credit file. A soft check won’t impact your credit score, but a hard check will temporarily. Other lenders will be able to see when a hard check has been carried out as it’ll leave a footprint on your credit report.

So, it’s important to know which kind of search is going to be performed for the mortgage in principle. Once you have this document, it’ll be valid for six months before it expires.

Help for first-time buyers 

We mentioned above that there are lots of helpful options for first-time buyers. Here’s a rundown of some of the main schemes.

1. Help to Buy

Help to Buy: Equity Loan (2021-2023) scheme is a UK-wide initiative from the Government to help people buy their first property.

You must have at least a 5% deposit to qualify. Then the government lends you up to 20% of the property price as a deposit on a new-build house, with no interest payable for the first five years. (Or 40% of the property price in London).

2. Shared ownership

Shared ownership is a government scheme designed to help people buy a home of their own. It enables those who can’t afford to buy a house at full market value to purchase a share in a home instead (usually 25%-75%). They then pay rent on the remaining portion of the property, owned by the housing association.

As time goes on, there may be the option to purchase a larger share in the property, up to 100% (at which point you’d be the sole owner). This process is known as ‘staircasing’.

Is shared ownership only for first-time buyers? 

No, shared ownership is not just for first-time buyers. To qualify, you must have a household income of less than £80,000 (or £90,000 in London) and at least one of the following factors must apply:

  • you’re a first-time buyer
  • you already have a share in a shared ownership property
  • you used to own a home but can’t currently afford to buy one

3. Lifetime ISA (LISA)

A Lifetime Individual Savings Account (LISA) is designed to help people save for a deposit to buy their first home, and/or for retirement.

You can put up to £4,000 per year into a LISA and the government will add a 25% bonus on top of your savings each year (up to a maximum of £1,000).

You can pay money into the account until you’re 50 years old, but you cannot withdraw funds from it unless:

  • you’re buying your first home
  • you’re over 60
  • you’re terminally ill.

To be eligible, you must be between the age of 18 and 40 years old - and a UK resident or servant of the Crown.