First Time Buyers FAQs
How much of a deposit will I need for my first home?
There are a small number of mortgages occasionally available with zero deposit. However these would only be for shared ownership or if a family member would allow a mortgage lender to put a charge against their home.
Besides that 5% is the minimum. Again, shared ownership means you would only need 5% of your property share, making the deposit required smaller still.
Can I get a mortgage as a single, first time buyer?
Yes. You will be using one person’s income instead of two, so will result in a proportionally lower mortgage and in turn a lower property price. On the plus side, you get to sleep like a starfish, worry free.
Can I still get assistance on the ‘Help to Buy’ scheme?
New applications for the Government Help to Buy scheme closed in 2023.
However, there are already a number of private companies stepping into that space offering equity loans and other innovative solutions.
Do I need a mortgage broker?
You need a mortgage broker as much as you need Contents insurance when you move. Not a requirement, but very much advisable.
How much does a mortgage broker cost?
This depends. On average a broker charges around £500. Some brokers charge more dependent on your circumstances, others charge nothing. The key is making sure you are getting good value for money.
A free broker doesn’t guarantee a better overall outcome just because you are saving some money, particularly when you consider how many more mortgages they will need to arrange to make up for the lack of fee. This becomes more important if you have tricky circumstances which requires a broker to spend time checking things in great detail. Similarly, paying a broker a fee isn’t a guarantee of superior knowledge service or outcomes.
Some fee free mortgage brokers (and some fee charging brokers) will sell connected products such as life insurance with a higher premium than normal to earn more commission. this is known as ‘Premium Loading’, you should ask your adviser if the commission they receive is ‘Premium Loaded’ before engaging with them as the cost to you could be much higher than is necessary. Needless to say, we don’t do this.
What is the mortgage application process?
We have a super helpful article on the mortgage process here.
What is a Freehold and what is a Leasehold property?
Freehold means you own the land. Leasehold means you don’t and you essentially rent the land off the land owner, generally with an agreement to guarantee you can do this for 100 – 999 years. When the leases on older properties run out you can negotiate a lease extension with the freeholder (land owner).
What is Stamp Duty and do I have to pay it?
Stamp Duty is a tax paid on buying a property, because we are taxed on absolutely bloody everything. Stamp duty land tax receipts in the United Kingdom amounted to approximately 14.1 billion British pounds in 2021/22.
If you are a first time buyer there’s usually a reduction avialable depending on government incentives. You can use our stamp duty calculator available on our Home Page to get an approximate idea of how much you may need to budget for.
What is an ‘agreement in principle’?
A little certificate estate agents and house builders ask for to prove you have your mortgage agreed, which doesn’t actually mean you have had your mortgage agreed.
It basically means you have passed the lenders own internal credit scoring process, unhelpfully they don’t use the number on your credit report and have set up their own systems as lenders have different assessments and have different things they do and do not worry about as much (amount of unsecured debts, missed payments etc).
It is entirely possible to obtain an agreement in principle certificate but then be declined at full mortgage application stage because of your documents, the property to name a couple of issues.
Any agreement in principle is only as good as the documentation it has been based on.
I've got my mortgage offer. Why is my first payment higher?
Your mortgage offer will include an illustration of the mortgage that has been offered to you. This illustration always assumes the mortgage starts on the first day of the following month. It will therefore typically indicate a first payment that’s higher than your regular monthly payment. This can come as a bit of a shock, understandably. In reality, this document is making a lot of assumptions, your first payment is determined by the day in the month that you complete as well as when your particular lender instructs their direct debits. There’s simply too many variables to say with any certainty what the first payment will be.
If your first payment is higher than your regular monthly payment, this will be because more than a month will have passed since completion and you will owe more than a months’ worth of interest. Your lender will always advise you of the first payment date and amount so that you can prepare.