Taking the first step onto the property ladder is no mean feat. After saving for a deposit, you'll need to work out how much you can borrow and how much can comfortably afford to repay each month.
You'll also need to decide how long you'd like to pay your mortgage back. Longer term mortgages offer lower monthly repayments, but cost more money in interest.
Then you'll need to get in touch with a lender or mortgage broker to arrange your mortgage agreement in principle, and finally, your official mortgage offer.
Let's look at all of the steps involved.
1. Get your finances ready
Most mortgage providers will lend up to 4.5 times the amount you earn.
You'll need to decide what price range the property you want to buy is in, then the amount of deposit you'll need to save towards it.
Ideally, you'll need to save around 10% of the property's total value as a deposit, but 95% mortgages are available, meaning you only need to save 5% of the property's total value.
There are schemes available to help you save for your deposit, like the Lifetime ISA, where you can save up to £4,000 a year and the government will chip in an extra 25%. That’s up to £1,000, for free.
Make sure your credit rating is in good shape.
If you're buying a new-build home, there are several buying schemes available to help you on your way.
You'll also need to think about stamp duty. As a first-time buyer, you wont need to pay any stamp duty on the first £425,000 of the property you're buying.
For the portion of the property between £425,000 and £625,000, you'll need to pay 5%. And for properties costing more than £625,000, you'll need to pay the normal stamp duty rates like everybody else.
Stamp duty calculator
How much stamp duty will you need to pay? Let our calculator do the maths. Here's how stamp duty works.
2. Compare mortgage rates
There are two ways of finding the best mortgage rate for you:
approach individual lenders for their best rates.
speak to a whole of market broker who can look at all of the deals currently available and find the best rate available for you.
Save money with Mojo Mortgages
Allow award-winning Mojo to show you the best rates available to you. A whole-of-market broker, Mojo work with over 70 lenders. And they won't charge you a penny for their services.
3. Decide the length of your mortgage term
Before higher mortgage rates, 25 years was a popular option. More recently, increasing numbers of first-time buyers are opting for 30-35 years.
A longer mortgage can keep the monthly payments lower, but you'll pay more in interest in the long term.
4. Agree on a monthly payment you can afford
The traditional rule of thumb is that you shouldn't pay more than 28% of your gross monthly income (that means before it's taxed) on your mortgage, and it's a threshold most lenders adhere to.
Mortgage calculator
Work out what your monthly mortgage payments could be with our mortgage calculator.
5. Arrange a mortgage agreement in principle
A mortgage agreement in principle (AIP) is a statement from a lender saying they're willing to lend you a certain amount before you purchase your home.
Most estate agents prefer buyers to have an AIP agreed before they can put in an offer, as it shows that you're a serious buyer.
To arrange an AIP, you'll need to provide a lender with your financial information, so that they can give you an indication of how much they're willing to lend you.
A mortgage in principle is not the same as a mortgage offer: an AIP provides an indication of how much a lender is willing to offer you, while a mortgage offer is official confirmation from a lender that they're willing to provide you with a mortgage.
6. Arrange your mortgage offer
Once you've found a property you want to buy, you'll need a mortgage offer to secure it
You don't have to go with the lender who offered you an initial AIP if you'd like to change, but if you do, the lender will use the information you gave for the initial AIP as part of the process
To secure a mortgage offer, you'll need to go through the full mortgage application process. This will involve providing information to prove:
Your identity
Your income
Your outgoings
This part of the process can take between 2-6 weeks, as lenders verify all of your documents and run credit checks.