First Time Buyer Guide to UK Mortgages

Working Out How Much You Can Actually Borrow

Before you fall in love with a listing, it helps to know your numbers. Lenders in the UK generally work on an income multiple, most commonly between 4 and 4.5 times a single salary or a combined household income. Some will stretch to 5 or even 5.5 times for higher earners or certain professions, but treating 4.5x as your realistic ceiling will keep your expectations grounded.

Your income multiple is only half the story, though. Lenders also run an affordability assessment, and it looks at what you actually spend. They will check your committed outgoings — credit card minimums, personal loans, car finance, childcare, student loan repayments — and then stress test the mortgage against a higher interest rate than you are being offered. In practice, that means being quizzed on whether you could still pay if rates climbed to around 8%.

A rough rule of thumb: if you have significant existing debt or childcare costs, the amount you can borrow will be noticeably lower than the headline multiple suggests.

Your Deposit: More Than Just a Percentage

Deposits are talked about in percentages because the loan-to-value ratio (LTV) drives everything from the rates you are offered to whether you get approved at all. The absolute minimum with some lenders is 5%, but 10% opens up a far wider range of deals and noticeably cheaper rates. At 15% or 20%, you start to look like a lower-risk borrower, and the pricing reflects that.

On a £250,000 property, 10% means a £25,000 deposit. Add legal fees, surveys and moving costs on top, and the real figure you need in the bank is higher than the deposit alone.

Where the money comes from matters too. Lenders accept gifted deposits from family, but they will usually want a signed letter confirming it is a gift rather than a loan, plus evidence of the funds. Savings need a paper trail — statements showing the money building up over months, not a lump sum arriving last week. Anti-money-laundering checks are strict, so gather your documents early.

What Lenders Look For in Your Finances

Credit scoring is not as mysterious as it seems. Lenders are asking one question: how reliably do you repay what you owe? A few practical steps make a real difference.

• Check your credit reports from all three main agencies before you apply, and dispute anything inaccurate.
• Register on the electoral roll at your current address — it is one of the simplest ways to strengthen your file.
• Keep credit card balances low. Using under 30% of your available limit is viewed far more kindly than being close to the max.
• Avoid new credit applications in the six months before you apply for a mortgage. Each application leaves a footprint.
• Steer clear of payday loans and gambling transactions on your statements — many lenders treat them as red flags.
• Stay put in your job if you can. Changing employer or going self-employed mid-application complicates everything.

Even mobile phone contracts and buy-now-pay-later balances count as committed spending, so tidy up the small stuff before a lender looks at it.

Schemes and Support Worth Knowing About

You do not have to do this entirely alone. A Lifetime ISA lets you save up to £4,000 a year towards a first home, with a 25% government bonus added on top — worth up to £1,000 annually. There is a withdrawal charge if you use the money for anything other than a qualifying first home, so read the rules carefully.

Shared ownership lets you buy a share of a property, typically between 25% and 75%, and pay rent on the rest. It can be a genuine route onto the ladder in expensive areas, though you should understand the lease terms and any restrictions on selling.

There are also government-backed guarantee schemes that encourage lenders to offer 95% mortgages, and first-time buyer relief on Stamp Duty Land Tax. Thresholds and eligibility change with each Budget, so confirm the current position before you budget.

The Costs That Catch People Out

The deposit is the biggest number, but it is not the only one. Budget for:

• Arrangement fees — often between £0 and £1,000, sometimes added to the loan.
• Valuation fee — the lender's own check on the property, occasionally free.
• Legal fees — typically £1,000 to £1,800 including searches and disbursements.
• A survey — a homebuyer report runs from around £400, a full structural survey considerably more.
• Stamp Duty — check whether first-time buyer relief applies to your purchase price.
• Removals, furnishings and buildings insurance — easy to overlook, and they add up quickly.

Keep a contingency of a few thousand pounds. Something always needs fixing in the first month.

From Agreement in Principle to Moving Day

An Agreement in Principle (sometimes called a Decision in Principle) is a lender's initial indication of how much it might lend you, based on a soft credit search. It usually lasts 60 to 90 days and carries real weight with estate agents, who want to know you are a serious buyer. It is not a guarantee, though — the full application involves documents, checks and a property valuation.

Speak to a whole-of-market mortgage broker if your situation is anything other than straightforward: self-employment, multiple income sources, a gifted deposit or a poor credit history. A good broker knows which lenders are likely to say yes and can save you weeks of rejected applications.

Finally, be honest with yourself about the monthly payment. Lenders calculate what you can borrow, not what you will enjoy repaying for 30 years. Leave room for the life you want to live alongside the home you are buying — that is what makes a mortgage comfortable rather than a strain.