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How to get a mortgage in the UK as a first-time buyer

Are you looking to get on the property ladder for the first time but are completely stumped when it comes to how to get a mortgage? Don’t worry, you’re not alone. Thousands of people take the plunge every year, but getting a mortgage can be completely bamboozling for the first-time buyer. How much can you afford? What kind of deposit do you need? What are the mortgage requirements if you have a history of bad credit? Read on to find out.

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What salary do I need to earn to qualify for a UK mortgage?

The first thing you need to know is that your ability to buy a house is not based purely on how much you earn. If you’re earning a decent salary then that will definitely help you (especially getting a deposit together, but we’ll get to that), but as a first-time buyer, some lenders will class you as a high-risk prospect because you have no previous history of paying a mortgage – that’s where your credit score comes in… 

key in door

What credit score do I need to get a first-time mortgage?

Here’s where things get slightly confusing. When people talk about credit scores they aren’t referring to one set of universal metrics – they might actually be referring to three different ones. There are three main credit scoring agencies in the UK; Equifax, Experian, and Transunion and they each have their own unique credit scoring systems. 

To make matters even more confusing, different mortgage lenders will use different scoring agencies, and you have no way of knowing which one they are using. What credit score do you need to get a first-time mortgage? There isn’t one! But there are some things that you can do to ensure that your credit rating is as healthy as can be to make things flow smoothly.

How do I check my credit score?

Your credit score is really important, so you need to find out what it is. Request free copies of your credit score from all three scoring agencies and they’ll send you an itemised report. Go through them with a fine toothcomb looking for any errors. If there are any errors, get in touch with the relevant agency immediately to have them removed.

Things like old debts that have long since been paid off still showing up, or even someone else’s debt with the same name as you accidentally showing up on your report could have a massive effect on your ability to get a mortgage or to get the best deal, so make this job priority number one.

First Time Buyers

How much can I afford as a first-time buyer?

Everybody’s financial situation is unique to them, so before you even think of getting a mortgage you need to sit down and work out how much you think you can realistically afford each month in mortgage payments. Factor in all your expenditures once you get paid and see how much is left.. There are lots of mortgage calculators out there to help you figure this out, but as a rough figure, most mortgage lenders will let you borrow 4.5 times the amount of your salary.

Your final monthly mortgage figure will be affected by a number of factors, namely which type of mortgage you sign up for, and the other big factor; how much deposit you put down. 

Which brings us neatly to our next point.

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How much deposit will I need for a first-time mortgage?

Each mortgage lender will have different requirements before agreeing to lend to you. However, it goes without saying that the more money you can put down as a deposit, the smaller your monthly mortgage payments will be.  You’ll also be offered much more favourable terms and conditions from a wider variety of lenders.

 Do I get any discounts as a first-time buyer?

Even though you are a first-time buyer, you’ll find that, in principle, you’ll be eligible for the same mortgage deals that everyone else is. However, one of the great things about being a first-time buyer is that you are also eligible for a number of discount schemes and packages that just aren’t available to people who already own, or have owned, property.

This includes First-Time Buyer 95% mortgages (where you only need a 5% deposit), the Government’s Help to Buy Scheme (whereby you pay a 5% deposit and the Government will cover up to 20% of the value of the house and you pay it back over time), and being exempt from paying stamp duty as long as your property is valued at less than £300,000. 

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Can I get a mortgage with a bad credit history?

Each mortgage application is treated on a case-by-case basis because everybody’s financial situation is unique to them. Acceptance is subject to status, but if you have a bad credit history you shouldn’t let that deter you from trying to get a mortgage. What you will find, however, is that your mortgage lender options will be much more limited and either the monthly payments or the amount of interest added (or potentially both), will be far higher than those people with a good credit score. 

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How can I increase my chances of getting a mortgage?

  • Save up as much deposit as you possibly can – and have tangible evidence of it.
  • Stay in the same job – This shows the lender that you have a reliable income.
  • Check you are on the electoral register – Discrepancies in your address on your various forms of ID will slow the process down significantly. 
  • Reduce any existing debts – This is really hard to do while you’re saving up for a deposit for a new house, but nothing will help to make you more appealing to lenders than low debt levels.
  • Do your homework – Once you’ve worked out if you can afford your mortgage, try to project other costs such as monthly utilities, having enough disposable income to allow for ‘unforseen’ circumstances, and don’t forget that you’ll need to pay for solicitors and application fees.

What not to do when applying for a mortgage?

Don’t apply for new credit -

Applying for lots of new credit facilities will not only have a negative effect on your overall credit score, but it will make you look desperate to potential lenders.

Don’t use above 50% of your credit card allowance -

This makes it look to the lenders as though you depend upon credit to get by, thereby making you a financial risk

Flip flop -

Once you’ve entered started a mortgage application, don’t change your mind to another product. This will drag things out substantially.

Still unsure? Let us help you with your first-time mortgage application!

Hopefully, that puts your mind at ease with some of the more complicated mortgage requirements in the UK, but if you want more advice or would like us to act on your behalf to find the right mortgage package for you, then get in touch with one of our friendly mortgage brokers. We offer a free consultation to settle your nerves and go through any questions that you may have, so take advantage of our years of experience and getting a mortgage will be a breeze!

Get the best mortgage broker advice from PBS Mortgages

Here at PBS Mortgages, we pride ourselves on taking our mortgage customers under our wing and making sure that they fully understand the process. Whether it’s advice on what you can reasonably afford that you need, or you’d like our brokers to take you through the application process, we’re only too happy to help.

Get in touch today and let us do the heavy work when it comes to hunting down the perfect mortgage for you.