Buying your first home, explained in simple terms: deposits, affordability, the Agreement in Principle and the fees associated with the transaction.
A first-time buyer mortgage works in much the same way as any other residential mortgage. You put down a deposit, borrow the rest from a lender, and repay it over an agreed term. What differs for first-time buyers is that lenders have no history of you managing a mortgage before, so they lean more heavily on your deposit, income, credit history and outgoings to decide what they are willing to lend.
Most residential lenders ask for a deposit of 10% of the property price, though some lenders will consider 5%. A larger deposit usually opens up a wider range of deals and better rates.
An Agreement in Principle, sometimes called a Decision in Principle, is a lender's initial indication of how much they might be willing to lend you, based on a summary of your income, outgoings and a credit check. It is not a guarantee of a mortgage offer, but it gives you a realistic figure to work with and shows estate agents and sellers that you are in a position to proceed.
Lenders assess affordability by looking at your income against your regular outgoings, including any credit commitments, subscriptions and typical spending, not just a simple multiple of salary. Two people earning the same amount can be offered different sums depending on what else they are paying out each month.
Lenders assess affordability by looking at your income against your regular outgoings, including any credit commitments, subscriptions and typical spending, not just a simple multiple of salary. Two people earning the same amount can be offered different sums depending on what else they are paying out each month.
The most common mistakes we see are applying for new credit shortly before applying, not budgeting for the additional costs of buying such as solicitors' fees, surveys and Stamp Duty, and viewing properties before knowing what is realistically affordable.
We talk through your circumstances, explain the mortgage options that may be available to you, and support you from your first enquiry through to completion. We will not promise a mortgage before we have looked at your situation properly, and eligibility always depends on your circumstances and individual lender criteria.
The questions we hear most from people buying their first home.
Speak to an adviserMost lenders ask for a deposit of 10% of the property price, though some lenders will consider 5%. A larger deposit usually opens up better rates and a wider choice of deals. The right amount for you depends on how much you have saved and what monthly payment you are comfortable with.
It is a lender's initial indication of how much they may lend you, based on your income and a credit check. It is not a guaranteed offer, but most estate agents expect to see one before they will put forward an offer on a property, so it is worth arranging early.
Lenders generally work from a multiple of your income, then check the payments are affordable alongside your outgoings and any credit commitments. This means the figure varies from person to person. An adviser can give you a realistic range before you start viewing properties.
Many lenders accept a gifted deposit from a family member.
There may be government-backed schemes aimed at first-time buyers, such as Lifetime ISAs and shared ownership, though what you are eligible for depends on your circumstances and the property. We can talk through whether any of these are relevant to you.
Yes. A solicitor or licensed conveyancer handles the legal side of buying a property, including searches, contracts and registering you as the new owner. We can point you towards this once your offer is accepted if you do not already have one in mind.
Whether you are buying, moving, remortgaging or you simply want to understand your options, speak to the ICE Mortgages team. No jargon, no pressure, just a straight conversation about what is possible.