Buying your first home is one of the biggest decisions you’ll ever make. It can feel overwhelming at first – there’s a lot of information out there, and it doesn’t always make things clearer. So here’s a straightforward guide to the mortgage process, written in plain English.

What is a Mortgage?

A mortgage is simply a loan used to buy a property. Because homes cost far more than most people have in savings, lenders – usually banks and building societies – lend you the money, and you repay it over time, usually between 25 and 35 years.

The property acts as security for the loan. That means if you were ever to stop making repayments, the lender has the right to repossess the home. That sounds serious, and it is – but for the vast majority of borrowers who make their payments on time, it’s never something they have to worry about.

How Much Can You Borrow?

Most lenders will offer between four and four and a half times your annual income. So if you earn £40,000 a year, you could potentially borrow between £160,000 and £180,000. Joint applications use the combined income of both applicants.

That’s a starting point, not a guarantee. Lenders also look at your outgoings, your credit history, the size of your deposit, and the type of employment you’re in. Two people on the same salary can sometimes be offered very different amounts.

The Deposit

You’ll need a deposit – usually at least five per cent of the property’s value. So on a £200,000 home, that’s £10,000 as a minimum. The bigger your deposit, the better the deals you’re likely to be offered, and the lower your monthly repayments will be.

If you’re struggling to save, it’s worth checking whether you’re eligible for a Lifetime ISA, which offers a 25% government bonus on savings of up to £4,000 per year. There are also some lenders that consider gifted deposits from family members.

Types of Mortgage

There are a few different types to be aware of:

• Fixed rate – your interest rate stays the same for a set period (usually two or five years). Great for budgeting, because your payments don’t change.
• Tracker – your rate moves in line with the Bank of England base rate. Can be good when rates are low, but payments can go up as well as down.
• Standard variable rate (SVR) – this is what most mortgages revert to after the initial deal period ends. Usually not the most competitive rate, so most people remortgage before reaching this point.

For most first-time buyers, a fixed-rate mortgage offers the most peace of mind, especially in the early years when you’re getting used to the costs of homeownership.

The Application Process

Before you start viewing properties in earnest, it’s a good idea to get a mortgage in principle. This is a written confirmation from a lender that, subject to full checks, they’d be willing to lend you a certain amount. It shows estate agents and sellers that you’re a serious buyer.

Once you’ve had an offer accepted on a property, the full mortgage application follows. You’ll need to provide documents including payslips or accounts if you’re self-employed, bank statements, proof of identity, and details of the property. Your mortgage adviser will guide you through exactly what’s needed.

What About Costs?

The deposit is only part of what you’ll need. There are other costs to budget for, including:

• Solicitor’s fees for the legal side of the purchase (conveyancing)
• Stamp Duty Land Tax – currently waived on the first £300,000 for first-time buyers purchasing up to £500,000 (subject to change)
• Survey costs to check the condition of the property
• Mortgage arrangement fees, which can sometimes be added to the loan
• Buildings insurance – a condition of any mortgage

It’s worth having a realistic figure in mind before you start. As a rough guide, budget for between £2,000 and £5,000 on top of your deposit to cover the additional costs.

Getting Good Advice

The mortgage market is large and can be complicated to navigate on your own. A whole-of-market mortgage adviser has access to a wide range of lenders and can match you to the deal that suits your circumstances – not just the one that appears first in a comparison website.

At Riviera Mortgages, we work with first-time buyers every day. We know how daunting it can feel, and we’re here to make the process as straightforward as possible. If you’d like to know where you stand, get in touch and we’ll be happy to talk it through.