Getting a mortgage as a first time buyer - what you need to know

Catherine Alexander
Partner and Mortgage & Protection Adviser at GDA

Getting a mortgage is likely to be the biggest financial commitment you’ll ever make. The good news is there’s alot that you can do to improve your chances of having your mortgage application accepted, it’s just important to be aware of the factors that affect your eligibility.

The best thing to do in terms of buying a first property is to start saving early and utilise any first-time buyer incentives available. The more you can save up to put down as a deposit, the bigger the choice of mortgages that will be available to you. You’ll also benefit from better rates and therefore lower monthly payments. Take a look at your options for saving using vehicles such as the Lifetime ISA, which is designed to be used for purchasing your first property and provides you with a 25% government contribution to your savings, up to a maximum of £1,000 per year.

Before applying for a mortgage, get a copy of your credit report. Whatever is on this report will be what the mortgage lenders will use when assessing your mortgage application in determining your suitability and risk. You should read through it carefully and make sure that it is an accurate reflection of your circumstances. If your credit rating isn’t looking great, there are a few ways that you can boost this, e.g., making sure you are on the electoral roll, making regular payments on time, building a credit history, or checking for any errors and reporting mistakes, etc.

Make sure that you consider all the costs involved in purchasing your first property and work out your budget, you will need to have the funds for your deposit, but you will also need to have enough spare to cover all the associated costs and fees e.g., valuations and surveys, solicitor fees for conveyancing, any stamp duty over the first-time buyer exemption, etc.

Debts are going to reduce your affordability (the amount that you are able to borrow). Before you apply for a mortgage, try to reduce any debts you have e.g., loans, hire purchase, credit cards, etc. This will help demonstrate to lenders that you manage your money responsibly.

Most lenders will want to see that you’ve been with your employer for a decent length of time before they’ll give you a mortgage. So if you’re thinking of switching jobs, it’s a good idea to wait until you’ve got your mortgage in place. Usually, it’s a good idea to have been in your existing job for at least three to six months before applying. If you are self-employed, lenders are going to need to see your SA302s and Tax Year Overviews relating to the last two or three years from HMRC. Some lenders will accept one year’s proof of income, but this does reduce the number of lenders with whom you can apply. If you don’t have these documents available lenders will also accept full accounts or an accountant’s certificate, but getting your SA302s and Tax Year Overviews is usually straightforward.

Using a mortgage broker can make the whole process of applying for a mortgage easier as they will be able to help you find out how much you can borrow and find the right mortgage deal for you. They can research the market for you and help you through the application process. At GDA you can speak to us free of charge, and you only pay a fee when we submit an application for you. We also support you post-offer, to make sure that you are supported all the way to exchange and completion. There are no hidden fees, just a one-off payment of £500.

This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.