If you're buying your first home, chances are you'll need a mortgage. We explain the steps you can take to give yourself the best chance possible of getting one
Make sure you're a credible first-time buyer
You’re sick of paying money to a greedy landlord, you’ve got a steady job and you’d like to buy your own house. But first things first - you need a mortgage.
Applying for a mortgage as a first-time home buyer can be tricky. The mortgage lender wants to lend to trustworthy borrowers, but you don’t have a track record. Read our checklist to find out if you’re ready to apply:
Have you saved at least a 5% deposit?
It’s very hard to get a mortgage if you don’t have at least a 5% deposit. You can work out roughly what you need to have in savings by looking at house prices on a property site like Zoopla or RightMove. Then divide the price by 100 and multiply it by 5. So if you are looking at a house worth £150,000, you will need £7,500 or more in savings.
The bigger the deposit, the more choice of mortgages you have. If you need to save more for a deposit, check out our secrets to find better savings rates .
Have you got a clean credit record?
Make sure your credit rating scrubs up
From a mortgage lender’s perspective, you’re a stranger. They will look carefully at your credit rating to make sure you haven’t struggled with debt before. You can read more about your credit rating here. and how to improve it here .
Are you registered to vote?
You may not think this has anything to do with your ability to pay a mortgage, but having your name on the electoral register will improve your credit rating. Lenders look at the register to check out where you live (and that you’re a real person).
Do you have sensible spending habits?
Mortgage lender says
Lenders now look closely at your spending habits. If you have a direct debit account with a gambling company, a large number of cash withdrawals on one night or you rely on regular financial help from your parents, they may think twice about lending to you.
Can you show a regular income?
In a lender's world, being a 9-5 office worker is cool
If you’re self-employed or a contract worker. you have to show the lender you have a regular income by showing tax statements and business accounts for at least 2 or 3 years. You can read more about how to document your income here .
Can you afford the monthly repayments?
You may be in the habit of paying rent, but a mortgage is a bigger commitment. You can work out the cost per month using a mortgage affordability calculator. You can also calculate the monthly payment here. We've got more on mortgage calculators here.
Remember that interest rates may be higher when it comes to remortgaging - read about how to protect yourself from an interest rate rise .
The next step.
OK, there's quite a lot of steps
If you tick all the boxes, then it's time to think about applying for a mortgage.
It's important you compare mortgage rates. You can get a sense of the current mortgage rates by reading our round-up of the best deals for a 5% deposit and a 10% deposit. If you've got a bigger deposit, see if you can get one of the lowest rates on the market here.
Taking out a mortgage is a big decision and most people receive advice before they do. If you go direct to a lender you will receive free advice - but you are more likely to receive advice about all mortgage deals from an independent mortgage adviser. Here's how to find one and how much money you could save. We've got more tips on sharing the burden of finding a mortgage here.