First-time buyers' mortgage guide

1. Work out your budget

Taking on a mortgage is one of the biggest financial commitments you'll ever make – if not the biggest. So it's important to do your prep, and to prep properly.

First up, you'll need a deposit. Most lenders won't even look at you without one. This could come from savings, help from family, an inheritance or somewhere else.

How your deposit affects the mortgage you get

Your deposit will dictate how much you can borrow and therefore the value of the properties you can look at. For example...

The average first-time buyer property in Great Britain cost about £228,000 at the end of 2025, according to Office for National Statistics and Land Registry data. So if you were to buy an average property with a 10% deposit, you'd need nearly £23,000.

That's not to say you will need this amount – it's just a baseline, based on an average property price, with the cost of homes varying wildly depending on where you are in the UK.

In terms of mortgage deals, you often need a minimum deposit of 10% of the property's value to get a good selection, though there are low-deposit deals available, including 5%. To get a decent interest rate, you'll need more than 20% of the home's value as a deposit, while you'll need more than 40% for the very cheapest mortgage deals.

The golden rule is simple:

The bigger the deposit, the better the interest rate, the lower your monthly repayments and the cheaper the mortgage.

The difference between a 5% and 10% deposit can be huge; the next big jump's at 20%, then 40%. So if you have any chance of pushing yourself up a band, do it.

How 'loan-to-value' works

Loan-to-value is the percentage of the property's value you're borrowing as a mortgage. In other words, it's the proportion that you're borrowing.

So if you're looking at a £100,000 home and have £20,000 to go towards it, that's a 20% deposit. You would owe 80% – so the loan-to-value is 80%.

Why does loan-to-value matter?

Loan-to-value (LTV) is used both when you first take out a mortgage and when you remortgage (get a new deal).

When you remortgage, it's recalculated using how much you still owe and what the property is worth at the time – so paying down your mortgage or a rise in your home's value can lower your LTV and potentially give you access to cheaper deals.

Using the example above, imagine you've now paid off some of your mortgage and owe £70,000. If you came to remortgage and the property's value is the same (£100,000), your LTV becomes 70%.

But if the house is now worth more, say £120,000, then your LTV is about 58% (as it's £70,000, divided by £120,000, multiplied by 100). This means you'll likely be able to get a better mortgage deal.

Equally, if the property's value has dropped to £65,000, you'd now owe more than it's worth (called negative equity), which often makes it harder to remortgage to a new lender.

Important. Your lender's valuation can affect how big a deposit you need. Lenders normally calculate LTV using the lower of:

• the price you've agreed to pay, OR

• their own valuation

So if you're buying a home for £200,000 with a £20,000 deposit, but the lender values it at £190,000, a 90% LTV mortgage would only cover £171,000 – which means you'd need to put down a £29,000 deposit instead (an extra £9,000).

Read more on the loan-to-value ratio.

Only have a small deposit? Help is available

How much might a lender let you borrow?

Lenders focus heavily on how much you can afford. They look at your income, regular outgoings, debts and other financial commitments to work out how much spare cash you have each month.

They'll also want to be sure you could still afford the mortgage if rates rose, so will stress-test your finances using a higher interest rate. Other factors, such as your existing commitments and how much credit you use, can also affect what they'll lend you.

Check the monthly repayments

Use our Mortgage Calculator to see what a mortgage is likely to cost you each month. Think carefully about whether you can afford it, and what would happen if interest rates went up.

If you need to, use our Money makeover guide to cut back where you can and work out what you can realistically afford to pay each month.

Importantly, the mortgage needs to be within your financial comfort zone. Don't push too hard – this risks you being unable to afford repayments in the future, and that can be catastrophic.

2. Get yourself mortgage-ready

Lenders are picky about who they give mortgages to. For example, to access the cheapest interest rates, you don't just need a good deposit, but a good credit score too.

Ways to boost your credit score

There's no quick fix when it comes to boosting your credit score. Some of the techniques below need to be done months before applying, so start the groundwork in good time.

• Check your credit files for errors. Get copies of your credit files from all three credit reference agencies – Equifax, Experian and TransUnion – and check they're accurate. If you spot a mistake, ask for it to be corrected before applying for a mortgage.
  

  See our Check your credit report for free guide for how to access all three reports and what to do if something's wrong. And consider signing up to MSE's Credit Club too – it not only offers free access to your TransUnion credit report, but provides an estimate of your 'Credit Eligibility Rating' and the amount lenders might let you borrow.
  

• Check addresses on your file. Check your address is up to date on all active accounts (even if you no longer use them). Old addresses can cause lenders to worry.
  

• Break with past relationships. Write to credit agencies asking to be delinked from any ex-partner or spouse you had joint finances with. See more on financially delinking.
  

• Rebuild your score. If you've got a poor credit score, it takes time to rebuild it. Perversely, one way to do it is to get a credit card and spend on it each month. This proves to lenders you can borrow responsibly. See more on credit rebuilding.
  

• Get on the electoral roll. Being registered to vote can boost your credit score. But, far more importantly than this, while you can have a perfect credit report without being registered there, it's very difficult to get a mortgage if you're not on the electoral roll.

Avoid things that can hurt your mortgage application

3. Choosing the right type of mortgage

There's no single type of mortgage that will suit everyone – what's right for you will depend on your finances, how much certainty you want, and your plans for the future.

There are three key choices you'll need to make, including how you'll repay the mortgage and whether you want a fixed or variable interest rate. We explain the main options below, plus what to consider if you're self-employed.

Choice: Repayment or interest-only

Unless you have a compelling reason, a capital repayment mortgage is the way forward. It's the only option that guarantees you're actually paying off some of the debt each month.

With an interest-only mortgage, your monthly payment doesn't chip away at your actual debt – it just covers the cost of borrowing the money. After 25, 30, 35 years of paying the interest on a £150,000 mortgage, you would still owe £150,000.

While capital repayment costs more each month than interest-only, you're paying off the original debt too, meaning you owe nothing at the end. And in the meantime, when you come to remortgage, you'll have repaid more of the debt, so you'll be able to get a mortgage with a lower LTV and, therefore, a lower interest rate.

For more on the differences, see our What mortgage to choose guide.

Variable-rate mortgages

Here, your mortgage rate, as the name suggests, can and will usually move up and down. The major, but not sole, cause of this are changes to the UK economy.

To complicate things, variable-rate deals fall into three categories:

• Trackers. These usually follow the Bank of England base rate, so if it rises or falls, your mortgage rate normally does too.

• Standard variable rates (SVRs). These are set by individual lenders and are usually what you'll move to when your fixed or variable deal ends. SVRs are typically expensive and lenders can change them.

• Discount rates. These offer a discount off another variable rate, usually the lender's SVR, for a set period. Carefully check the rate you'll actually be paying.

For more on the differences, see our What mortgage to choose guide.

Choice: Do you need a flexible mortgage?

Once you've decided between fixed and variable, the next question is whether you want a more flexible mortgage. This means getting features that allow you to increase or decrease what you repay – and overpaying is far more important than any other type of flexibility.

What is overpaying?

The most popular flexible feature is the ability to overpay your mortgage, which means paying back more than you need to – whether that's each month or as a one-off. This can result in clearing the mortgage more quickly and paying less interest overall.

Here's the impact of overpaying £100 a month on a £150,000 mortgage over 25 years at 5%...

So by paying an extra £100 a month, you'd clear the mortgage four years and seven months earlier and save £23,350 in interest.

For what to consider before overpaying, see our Should I overpay my mortgage? guide. We've also got a Mortgage Overpayment Calculator where you can explore the impact.

Timing your overpayment can be important

Most lenders calculate mortgage interest daily, so an overpayment starts reducing the interest you owe almost straightaway. But some calculate interest monthly, quarterly or annually, so check how yours works – making an overpayment just after an annual calculation could mean waiting months before you see the full interest-saving benefit.

Other flexible features to consider

• 'Borrow back' facility. If you're overpaying, a few mortgages will let you get the overpayments back if needed. If it does, then you can in effect use your mortgage as a high-interest savings account. However, if savings rates are higher than your mortgage rate, it may be best just to put any spare cash into savings.
  

• Payment holidays. Here, the lender will allow you to stop paying when you want. But be careful. Lenders don't let you skip payments from the goodness of their hearts. You'll pay for it as the interest continues to be added to your loan.
  
  Typically, borrowers taking a 'holiday' arrange to miss one or two payments, and their monthly payments are then recalculated to spread the cost of the missed payments over the rest of the life of the mortgage – in other words, it'll go up.
  

• Offset mortgages. An offset mortgage links your savings to your mortgage, but keeps them in separate accounts. Your savings are used to reduce the balance you pay interest on. So if you have a £150,000 mortgage and £15,000 in savings, you'd only pay interest on £135,000. Yet you can still access your savings if needed.
  
  Offset mortgages generally come with higher rates than standard deals. They tend to be most useful if you have a sizeable amount in savings to offset against the mortgage.

Choice: Early repayment charges

Some lenders levy an early repayment charge if you switch deal, repay the loan early or overpay by more than is allowed.

These charges can be expensive, so check the terms carefully before taking a deal – especially if you think you might move, remortgage or make large overpayments.

Think you'll move home?

Many mortgage deals are 'portable', so moving home doesn't have to involve a new deal, which can be important if you'd face an early repayment charge to switch.

But bear in mind that even if a mortgage deal is theoretically portable, there is no guarantee the lender will actually agree to it. The lender might not allow it if it doesn't like the property you're moving to, for example, or if your finances have got worse.

See our guide on Porting your mortgage for more information.

Are you self-employed?

Getting a mortgage can be tough if you're self-employed or would struggle to prove your long-term income – perhaps if you've worked abroad or you're on a temporary contract.

You'll need cast-iron proof of your income, which isn't easy. You can usually give this evidence in one of two formats:

• Business accounts. Preferably three years of accounts, though two can suffice. Usually, they need to be signed off by a chartered or certified accountant.

• Tax returns. If you can't show business accounts then you'll need to show two or three years of tax returns instead.

You'll usually be assessed on profit rather than turnover, which can make borrowing more difficult if you've only recently become self-employed or your declared profits are low. A mortgage broker can help with more complex cases, as they'll know which lenders are likely to accept your circumstances and what evidence they'll want.

See our Mortgages for the self-employed guide for more information if you're in this position.

4. Don't forget mortgage fees & Stamp Duty

5. How to get a mortgage as a first-time buyer: step-by-step

Once you've had an offer accepted on a property, you can make a full mortgage application. Before then, you can get a mortgage 'agreement in principle', which gives you an indication of how much a lender may be willing to lend – though it isn't a guarantee you'll be accepted.

When it comes to getting the mortgage itself, you can use a broker or apply directly to a lender. Whichever route you choose, don't just rely on your existing bank, as it'll only show you its own deals rather than what's available across the wider market.

Here we've outlined how the two ways of getting a mortgage work: using a broker or going direct.

Option A. Use a broker to get a mortgage

A broker is a qualified and regulated mortgage adviser. As there's a mass of choice and deals can disappear fast, using a broker is a good idea for many people. Quite simply, they save you trawling through deal after deal.

But not all mortgage brokers are equal. So ask a broker these questions:

❓Do you check all the lenders? Some brokers only search a limited panel, while others cover most of the market. Ask whether you'll need to check any direct-only deals yourself.

❓How will you make your money? Brokers may be paid commission by the lender, charge you a fee, or both. Make sure you know what you'll pay and when.

❓Are you qualified? Check you're dealing with a qualified, regulated mortgage adviser. If you receive unsuitable advice, you'll be better protected than if you applied alone.

For a full rundown of top mortgage brokers, see our Cheap mortgage finding guide.

Option B. Apply directly to a lender

If you're confident choosing a mortgage yourself, there's nothing stopping you applying directly to a lender without using a mortgage broker. You'll need to do the research yourself, including comparing deals across the market and factoring in fees.

Start with our Mortgage Best Buys tool, where you can compare deals in one place.

6. Watch out for the hard sell on insurance

Some lenders and brokers try to make extra money during the mortgage process, so be prepared for the hard sell on additional products along the way.

Mortgage payment protection insurance

Mortgage payment protection insurance (MPPI) is a form of accident, sickness and unemployment insurance designed to cover your mortgage payments if you can't work due to illness, injury or redundancy. Beware: it can be pricey.

If you're considering MPPI, make sure you check:

• That it will pay out if you claim.

• When it will start paying.

• How much it will pay and for how long.

Be extra careful if you're self-employed, think you're at risk of redundancy or have existing medical conditions. And don't just assume mortgage brokers will offer the best-priced policy.

See our Mortgage life insurance guide for full information and help.

Bundled buildings/contents insurance

All lenders insist you take out buildings insurance if you're buying a freehold property. If you're buying a leasehold property, buildings insurance may already be covered by the freeholder.

Be suspicious of lenders that insist you buy buildings insurance from them, though be aware that some of them will charge a fee (about £30) if you decline to take their insurance.

If you go elsewhere for your home cover, some seriously cheap deals are possible. By using cashback incentives, some people have even been PAID to take out insurance.

See our collection of insurance guides to find the best deal for you.

Life insurance from your lender/broker

Don't assume that, just because someone sold you one financial product, they'll automatically get you a good deal on extra bits such as life cover or other insurance.

Buying your first home is probably the first time you've thought about life insurance, but don't rush in and grab the first one offered to you. In some cases, you can save 50% by buying life cover elsewhere.

See our Life insurance guide for a full rundown on how to find the cheapest deals.

7. First-time buyer FAQs

Q. Will the lender lend on my property?

Just because you qualify for a mortgage based on your finances doesn't mean you'll get it – the lender also needs to like the property. Some won't lend on homes near commercial premises, without a working kitchen or bathroom, in a high-rise or with cladding. Declare everything about the property from day one and check the lender has no restrictions that could kibosh your application. A good broker may know which lenders are more likely to accept your property.

Q. What paperwork will I need?

Gather what you'll need before applying and double-check with your lender or broker early so you're not held up waiting for paperwork. You'll typically need:

• Proof of income. Often your last three months' payslips or two to three years' accounts if self-employed.

• Proof of deposit. Which may include a gifted deposit declaration.

• Your last three months' bank statements.

• Proof of bonuses or commission.

• Your latest P60.

• SA302 tax return forms. If required (mainly for the self-employed).

Q. What does the mortgage 'APRC' mean?

The annual percentage rate of charge (APRC) shows the effective average annual interest rate if you kept your mortgage for its entire term. For example, if you fixed at 3.49% for two years before moving to a standard variable rate of 4.74%, the APRC might be around 4.3%. Yet you'd never actually pay 4.3% – it's just an average. You're likely to remortgage before the term ends, plus the SVR can change. So focus on the interest rate of the deal, the fees and the lender's current SVR.

Q. How long should I set the mortgage term for?

The mortgage term is often overlooked. Consider how old you'll be when it ends, as many lenders won't allow a mortgage to run into retirement. A longer term means lower monthly repayments, but you'll pay more interest overall. A shorter term costs more each month but can be much cheaper overall. If you can overpay, keeping a longer term can give you more flexibility while still allowing you to pay it off quicker. See more on mortgage terms in our What mortgage to choose guide.

Q. How do mortgages for couples work?

Most couples buy as 'joint tenants', with both names on the mortgage and deeds, meaning both are jointly responsible for the repayments. Another option is to own as 'tenants in common', which sets out what proportion of the property each person owns (for example, 75/25, 60/40). We explain the differences in our Joint property ownership guide.

Q. Can I leave my property and rent it out?

Yes, but you'll need permission from your lender first, known as consent to let. You may be able to keep your existing mortgage, though the lender might increase the interest rate or force you to move to a buy-to-let mortgage, which is typically more expensive.