Getting Started on the Property Ladder
Buying your first home is one of the most significant financial decisions you'll make. This comprehensive guide will walk you through every step of the process, from saving for a deposit to getting the keys to your new home.
1. Saving for Your Deposit
Most lenders require at least a 5-10% deposit, but saving more can give you access to better mortgage rates. Here are some tips to accelerate your savings:
- Open a Lifetime ISA - save up to $4,000 per year with a 25% government bonus
- Set up automatic transfers to your savings account on payday
- Cut unnecessary expenses and redirect that money to savings
2. Understanding Your Budget
Before you start house hunting, it's crucial to understand what you can afford. Lenders typically use a multiple of your annual income (usually 4-4.5x) to determine how much they'll lend you. However, you should also consider:
- Monthly mortgage payments should be no more than 35% of your take-home pay
- Factor in additional costs: stamp duty, solicitor fees, surveys, and moving costs
- Build an emergency fund for unexpected repairs and maintenance
3. Types of Mortgages
Understanding the different types of mortgages is essential for making the right choice:
Fixed Rate
Your interest rate stays the same for a set period (2-5 years), giving you predictable monthly payments.
Tracker
Your rate follows the Bank of England base rate, so payments can go up or down.
Variable Rate
The lender sets the rate, which can change at any time. Often higher than fixed rates.
Help to Buy
Government schemes to help you buy with a smaller deposit.
4. The Application Process
Once you've found a property and have your deposit ready, here's what happens:
- Get a Decision in Principle (DIP) from a lender
- Make an offer on a property
- Apply for a mortgage with your chosen lender
- The lender conducts a valuation survey
- Instruct a solicitor to handle the legal work
- Exchange contracts and pay your deposit
- Completion day - get the keys!
Top Tip
Don't just go with your bank's mortgage. Shop around and consider using a mortgage broker who can access deals from multiple lenders and find the best rate for you.
Ready to Get Started?
Use our mortgage calculator to see how much you could borrow, or speak to one of our mortgage advisers who can guide you through the entire process.