First-time buyer’s mortgage guide

As a first-time buyer, you may think that being accepted for a mortgage is more difficult for you. After all, with no collateral, your deposit is likely to be lower than average. What’s more, as a new borrower, your credit history may not be complete enough to secure a loan.

Who said getting on the property ladder was ever easy?

However, with a little help, you’ll find there are a number of ways in which you can buy your home – some more obvious than others. In this guide, we provide everything that you need to know about applying for a mortgage, from how to get started, to what happens after your offer has been accepted (and everything in between).

How to apply for a mortgage

To apply for a standard mortgage, you’ll normally need to supply some relevant documentation to support your application. These vary from lender-to-lender and will depend on what kind of mortgage you’re looking for. 

However, failure to supply even just one of these can hold up your application so, if you haven’t already, start collecting these now.    

The type of documentation you’ll typically need may include: 

Three months of bank statements 

You’ll need to include your most current bank statements with your mortgage application. Most lenders will use these to run an affordability test, to check that your income is sufficient to cover your standard outgoings, as well as a mortgage repayment.   

Proof of income

You’ll need to include your most recent payslips with your mortgage application – most lenders will require your past three.   

P60 form from your employer 

This will prove your employment and show your earnings for the previous tax year.  

Your passport, driving license or other form of identification 

You’ll need to prove that you’re a legal UK resident. 

If you’re self-employed or a freelancer, you may also require the following: 

Tax Return or SA302 form 

This will include a tax overview and calculations from your self-assessment or your trading accounts.

How can a mortgage broker help first-time buyers?   

First-time buyers will probably benefit the most from using a mortgage broker. Why? Well, as well as the knowledge gap you’ll almost certainly have since this is likely to be your first time applying for a mortgage, first-time buyers may have little to no credit history to be accepted for a mortgage by some lenders.    

That’s not to say that they have bad credit. Some first-time buyers may simply not have taken out any loans or credit cards before now and so their credit history would be minimal.   

Here at Mortgage Matters Direct, we know exactly which lenders offer mortgages with lower deposits and have more favourable credit requirements. What’s more, our long-standing relationships with these providers mean that we’ll be able to secure the best possible mortgage for you. 

With our help, buying your first home will be made that little bit easier.

first time buyers mortgage guide

Costs of buying a home 

First-time Buyer Stamp Duty 

For property purchases up to £300,000 there’s a stamp duty exemption for first-time buyers. If your new home is over the stamp duty threshold and below £500,000, first-time buyers will have to pay the standard 5% on the remaining amount. So, if you purchase your new home for £305,000, you’ll only have to pay stamp duty on the £5,000 that’s over the limit.

Right now though, thanks to the Stamp Duty Holiday, rates have changed significantly and continue to help support the housing industry. Between 8 July 2020 and 30 June 2021, stamp duty is only paid when the purchase price exceeds £500,000 for all buyers (unless you are buying a second property or more where Higher Rate Duty applies). On 1 July 2021, this will revert back to the standard rules (as mentioned above) for first-time buyers.


This is likely to be the highest cost of all, and no doubt something which you’ve spent years saving up for. Traditionally, the more you can afford to put towards your deposit, the better your mortgage rate or terms will be. However, as a first-time buyer, you may have access to a range of Help to Buy mortgages which only require a 5% down payment on the property if you are looking to buy a new build property. More on this later…

Mortgage Fees

Some mortgage providers offer a longer fixed-rate or a lower interest rate in return for a fixed fee which can be paid ahead of you receiving the loan or added (but you could incur interest for the duration of the loan if not paid off). This fee is usually fairly substantial, sometimes as much as a thousand pounds or more.   

Whether this is the right option for you will depend on your circumstances. A mortgage broker can help you to decide whether paying a larger upfront figure will put you in a better financial position in the long run. 

Conveyancing Fees

Your conveyancer will command a fee for the hours they put into helping you move. Some conveyancers – including the practice that we work with – offer a no-sale, no-fee promise which means you won’t be liable for this fee unless your purchase goes through.  However, some fees spent on costs like searches may not be refundable once carried out. 

First-Time Buyer Mortgages

Help to buy mortgages (new build only)

For some first-time buyers, getting your foot on the property ladder can be hard. With rising property prices and uncertain interest rates, it can take years to save what’s needed to even start the process of applying for a mortgage.

Luckily, there are government schemes which can help to take the pressure off. From Help to Buy Equity Loans to Shared Ownership mortgages, our experts can advise you on everything you need to know about these schemes.

What is Help to Buy?

Help to Buy is the current government initiative that’s designed to help first-time buyers afford to buy their first home.

Help to Buy: Equity Loan.  

Choose for: New build homes only 

What is this? The Government will lend you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. For your mortgage, there are certain lenders you can use who specialise. What’s more, you won’t be charged loan fees on the 20% loan for the first five years of owning your home.

Help to Buy: ISA 

Choose for: Any home 

What is this?  Deposit savings for your first home into a Help to Buy: ISA and the Government will boost your balance by 25%. So, for every £200 you put away, you’ll receive an extra £50 from the government, up to a maximum of £3000. 

Shared Ownership.  

Choose for: Eligible Homes 

What is this?  Shared Ownership simply means that you own a portion of your home – usually between 25% and 75% – and pay rent for the rest. You’ll also need to part with far less upfront with a shared deposit mortgage – typically just 5 to 10% of the Share of the property you are buying. Shared Ownership is also available to previous homeowners who cannot afford to buy now. As long as your annual household income is less than £60,000, you could be accepted. 

Joint Borrower Sole Proprietor Mortgage 

This allows your parent or guardian to apply for a mortgage with you. The key benefit for this kind of mortgage of course, is that a lender can take into consideration both of your incomes, which could increase how much they’d be willing to lend you and the likelihood that you’ll be accepted.

The best bit? The deeds of the property belong solely to you and once you’re in a position to take over the mortgage by yourself, you can simply remortgage and release the other party from your mortgage contract.   

Gifted property with a mortgage 

Gifting property to a family member is an increasingly popular way to help first-time buyers onto the property ladder.

Not only a thoughtful gesture but gifting property may also bypass the need for your benefactor to pay Capital Gains Tax or inheritance tax further down the line. What’s more, they don’t have to wait until your mortgage is paid off to do this (you should seek tax advice).

Gifting property with a mortgage is easier than you may think – your benefactor simply ‘gifts’ what they’ve already paid, leaving you to arrange a mortgage to cover what’s left. 

Our mortgage advisors can chat you through the nitty-gritty of how this is done. 

What to expect after your offer has been accepted?

Documents to keep track of…  

If this is your first time buying property, you may be surprised about just how many documents are sent your way. 

From Mortgage Agreements to Surveys and Valuations, you may wonder how much of it all you should really be reading. To help you decide, we break down the common steps to buying a new home and the paperwork that you should expect to receive:

Mortgage Agreement in Principal 

Once you’ve been accepted for a mortgage, you’ll receive a Mortgage Agreement in Principle which essentially shows that you have the means to afford your new home, by way of a mortgage. Once you have this, keep it safe as any future sellers and their agents will want to see it before they accept any offer you make on their property. 

A Mortgage Agreement in Principle is usually only valid for 90 days so if your search for the perfect home extends beyond that, you may need to reapply for this, supplying up-to-date documentation, such as bank statements and payslips. 

Bear in mind that whilst you have an Agreement in Principle but are yet to find your property and finally secure your mortgage, it would be best not to apply for any other further credit until you have moved into your new home as this can have an impact on the lender’s decision to grant you a mortgage.


Once your conveyancer has completed their Searches, you’ll receive a copy which will detail anything you’ll need to be aware of, pertaining to the local authority, environmental concerns and the neighbourhood’s drainage and water supply. 


A valuation will either be conducted in person or remotely using neighbouring property prices as an indicator of your new home’s market value.  

This can often be incorporated as a part of your home buyer’s report. In any case, a valuation is carried out on behalf of your mortgage provider to assure them that the property is worth what you’re planning on paying for it. You may not receive a copy of the report.

Homebuyer’s Report 

This is a type of property survey which identifies and advises on any defects your new home has and whether this has any bearing on its value. Your surveyor will only include the visible aspects of the property – so, any issues lurking under the carpet will not be included. 

Your Homebuyer’s Report should contain the following:

  • Background on the property and location.
  • An estimate for the cost of rebuilding the property for insurance purposes.
  • An assessment of any damp-proofing, drainage or insulation in the building. 
  • Condition of the building’s timbers and checking woodworm or rot.
  • Damp test results taken from the walls.
  • Details of urgent problems which need specialist attention before signing a contract.
  • Any major faults that may affect the property’s value.

Full Building Survey 

If you’re buying a period property (that is, a building which is older than 100 years) or a non-traditional structure, you may opt for a Full Building Survey to be carried out. Like the Home buyer’s report, this will provide a comprehensive overview of the building’s condition but the evaluation will be covered in greater detail. 

Insurance Policies 

Most mortgage providers will require you to take out Building Insurance before you’re allowed to complete. Along with Building’s Insurance, you may also choose to take out Contents Insurance. It is highly advisable to seek advice on Life Insurance, Income Protection and/or Critical Illness Cover. Mortgage Matters Direct will be able to help you to set these up. 

Building Guarantees 

Your seller should provide any Building Guarantees – such as Fensa Certificates for your windows, damp-proofing guarantees or Boiler Servicing records. New build properties should come with NHBC or other building warrantees are usually valid for 10 years so you should keep hold of these when they’re given to you.   


If your property is leasehold, your conveyancer should send you a copy of the lease and any service charges which you’ll have to pay.   

Mortgage Agreement  

Once you’re close to completing on your sale, you’ll be asked to sign a Mortgage Agreement by your conveyancers. This is a legally-binding contract which outlines your promise to pay the mortgage and abide by the loan’s terms. 

On the anniversary of your Mortgage Agreement, you’ll receive an annual mortgage statement each year until your loan is paid back in full.   

Seller’s property information form  

This is useful to keep handy while you get settled in since it contains practical information such as the location of the water stop cock, electricity and gas meters and confirmation of who is responsible for which boundary fences.

Solicitor Confirmations 

Although Title Deeds are now usually updated and stored digitally, your solicitor should still send over confirmation that you are registered as the owner of the property within a month or two of completion. 

Timeline for buying your new home 

Week 1-2: Draft contracts 

The seller’s conveyancer will now draw up a draft contract and send this to your conveyancer, who will then raise preliminary enquiries and make a Land Registry search to prove Title ownership of the property.

Week 2-5: Searches (Normally after the mortgage offer is out)

Your conveyancer will carry out a search with the Local Authority which will reveal any planning consents granted for the property and any other relevant local issues. These cover:

  • Local authority searches 
  • Drainage searches 
  • Environmental searches 

Any questions that come from this search are sent to the seller’s solicitors for further clarification.

Week 2-5: Survey & valuation 

Before agreeing to lend you money, your mortgage lender will require a valuation. Put simply, they want to make sure that the property is worth what you’re going to pay and that they will make a return on their investment. 

A survey, on the other hand, is done by a chartered surveyor and is predominantly for the benefit of the buyer to help them make a more informed decision about the property they’re planning to purchase. Though not compulsory, it’s a sensible action and can give you leverage for negotiation with the seller if they find a problem.   

Week 2-5: Formal Mortgage

Your lender will send this document for you to sign. Once done and returned, the mortgage is in place and you are ready to exchange contracts.

Week 10-12: Contracts approved 

Once your conveyancer is satisfied with all results from the searches, survey and preliminary enquiries, the contract can be approved. 

Week 12-13: Exchange of contracts 

The contract is signed by both you and the seller. The deposit – usually between 5-10% of the purchase price – is transferred or paid by the buyer’s conveyancer in the form of a banker’s draft. At this stage, the transaction is now legally binding and completion dates are set.

Week 13-15: Completion 

This is the date agreed by the seller and the buyer. On average this takes 13 weeks but can happen sooner or take longer. On completion day, the balance of payment is transferred from your conveyancer’s account to the seller’s conveyancer’s account. You will be notified once you have completed and only then, can you move into your new home.

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