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Buying your first home is one of the biggest and most exciting milestones in life—but it can also feel overwhelming, especially when it comes to understanding mortgages. Between fluctuating interest rates, different mortgage types, confusing terms like LTV and AIP, and pressure to get it “right,” it’s no wonder first-time buyers often feel lost.
This definitive 2025 guide from SellTo will walk you through everything you need to know about getting your first mortgage—from how much you can borrow to common mistakes to avoid. No jargon. No sales pitch. Just clear, practical advice from property experts.
🏠 Table of Contents
- What Is a Mortgage, Really?
- Who Qualifies as a First-Time Buyer?
- The First-Time Buyer Journey: A Timeline
- How Much Can You Borrow?
- Understanding Deposits (and Where to Find Them)
- What is Loan-to-Value (LTV)?
- The Main Types of Mortgages
- Fixed Rate vs. Variable Rate Mortgages
- What Mortgage Term Should You Choose?
- How to Improve Your Mortgage Eligibility
- Credit Score Tips for First-Time Buyers
- Getting a Mortgage in Principle (AIP)
- How to Compare Mortgage Deals
- Hidden Costs of Getting a Mortgage
- Government Help for First-Time Buyers
- Understanding Mortgage Fees and Charges
- Choosing a Mortgage Broker vs. Going Direct
- What to Do If You’re Self-Employed
- Common Mistakes First-Time Buyers Make
- Final Checklist Before Applying for a Mortgage
1. What Is a Mortgage, Really?
A mortgage is a loan secured against a property. You borrow money from a lender (usually a bank or building society) to buy a home, and agree to repay it over a number of years with interest. If you fail to keep up with repayments, the lender can repossess your home.
2. Who Qualifies as a First-Time Buyer?
You’re considered a first-time buyer if:
- You’ve never owned or inherited a property before
- You’re buying your main residence (not a buy-to-let)
- You’re purchasing either alone or with someone who is also a first-time buyer
Note: Some government schemes require all applicants to be first-time buyers.
3. The First-Time Buyer Journey: A Timeline
- Save your deposit
- Check your credit report
- Get a mortgage in principle
- View properties
- Make an offer
- Apply for a mortgage
- Legal work and surveys
- Exchange contracts
- Completion – get the keys!
4. How Much Can You Borrow?
Most lenders offer 4 to 4.5 times your annual income. Some may stretch to 5x or more if you have a high credit score, low debt, and a strong deposit.
Examples:
- Earning £30,000 = borrow approx. £120,000 – £135,000
- Couple earning £50,000 total = borrow approx. £200,000 – £225,000
Lenders will also consider:
- Other debts (credit cards, loans)
- Monthly outgoings
- Job type and contract status
- Your credit history
5. Understanding Deposits (and Where to Find Them)
You’ll usually need at least 5% of the property value as a deposit. The more you can save, the better mortgage rates you’ll get.
For a £200,000 home:
- 5% deposit = £10,000
- 10% = £20,000
- 15% = £30,000
Sources of deposits:
- Personal savings
- Help from family (“gifted deposit”)
- Lifetime ISA savings
- Bonuses or inheritance
6. What is Loan-to-Value (LTV)?
LTV is the percentage of the property price you’re borrowing vs. the deposit you put down.
- £20,000 deposit on £200,000 home = 90% LTV
- £50,000 deposit on £200,000 home = 75% LTV
Lower LTV = better mortgage rates because it’s less risky for the lender.
7. The Main Types of Mortgages
- Repayment mortgage – you repay both interest + capital monthly
- Interest-only mortgage – you repay only the interest monthly, and pay off the capital in one lump sum later (rare for first-time buyers)
Most first-time buyers go with repayment mortgages, which gradually build up equity.
8. Fixed Rate vs. Variable Rate Mortgages
- Fixed rate: You lock in your interest rate for 2, 3, or 5 years. Good for budgeting.
- Variable rate: Your interest rate can go up or down depending on the lender or economy.
Fixed rates are safer for those on tight budgets.
9. What Mortgage Term Should You Choose?
Terms usually range from 15 to 35 years. A longer term means:
- Lower monthly repayments
- But more interest paid over time
Shorter term = faster repayment, less total interest, but higher monthly payments.
10. How to Improve Your Mortgage Eligibility
- Register on the electoral roll
- Pay off credit cards or loans
- Avoid missed payments
- Don’t apply for new credit close to applying for a mortgage
- Use a credit builder card if needed
11. Credit Score Tips for First-Time Buyers
Lenders check your score with Experian, Equifax or TransUnion.
Improve it by:
- Paying bills on time
- Reducing credit card balances
- Keeping old accounts open
- Avoiding multiple hard searches
A poor credit score can mean higher interest—or rejection.
12. Getting a Mortgage in Principle (AIP)
An AIP is a letter from a lender showing how much they’re willing to lend based on your basic info.
- Not a formal offer
- Helps when making offers on homes
- Doesn’t affect your credit score (in most cases)
13. How to Compare Mortgage Deals
Look at:
- Interest rate
- Product fees (sometimes £999+)
- Early repayment charges
- Flexibility (can you overpay?)
- Cashback offers
Don’t just chase the lowest rate—check the total cost.
14. Hidden Costs of Getting a Mortgage
- Arrangement fees
- Valuation fees
- Legal fees
- Stamp duty (first-time buyers often exempt up to £425,000 in 2025)
- Moving costs
- Surveys
Budget for an extra £3,000–£6,000 on top of your deposit.
15. Government Help for First-Time Buyers
Some options (may vary regionally):
- Lifetime ISA (LISA): 25% bonus on up to £4,000 per year saved
- Shared ownership: Buy part-rent/part-own a home
- First Homes Scheme: Discounted new builds for local/key workers
16. Understanding Mortgage Fees and Charges
- Product fees: Charged by the lender
- Booking fees: Paid upfront, non-refundable
- Legal fees: Paid to your solicitor
- Valuation fee: To assess if the home is worth the loan
Some deals offer “fee-free” options—but often at higher interest rates.
17. Choosing a Mortgage Broker vs. Going Direct
Broker pros:
- Access to more deals
- Can help with paperwork
- Useful if you’re self-employed or have complex finances
Direct pros:
- No broker fee
- Quicker if you know what you want
Some brokers charge a flat fee; others are paid commission by lenders.
18. What to Do If You’re Self-Employed
- You’ll usually need 2+ years of accounts
- Must show steady income
- Lenders prefer SA302 forms from HMRC
Work with a broker experienced with self-employed applicants.
19. Common Mistakes First-Time Buyers Make
❌ Not budgeting beyond the deposit
❌ Ignoring credit score problems
❌ Overstretching finances with monthly repayments
❌ Forgetting about interest rate increases after fixed term
❌ Relying on online calculators without speaking to a lender
❌ Not reading the small print on mortgage offers
20. Final Checklist Before Applying for a Mortgage
✅ Have you saved at least a 5–10% deposit?
✅ Is your credit report clean and accurate?
✅ Have you reduced or cleared debts?
✅ Are you on the electoral roll?
✅ Have you researched the right mortgage type and term for you?
✅ Do you know your monthly budget (including emergencies)?
✅ Have you prepared payslips, bank statements, and ID documents?
✅ Do you have a Mortgage in Principle?
✅ Have you spoken to a broker or lender directly?
✅ Are you mentally ready to commit to 25+ years of repayments?
Conclusion: Your First Home is Within Reach
Buying your first home might seem complex—but with the right tools, knowledge, and a good plan, you can make it happen. Take your time. Ask questions. Shop around. Protect your credit. And don’t feel pressured to rush.
If you’re ever looking to sell a property quickly—whether you’re upgrading, relocating, or consolidating—SellTo is always here with fair cash offers, no fees, and fast completions. But until then, happy house hunting!to a well-managed transition that respects your loved one’s legacy while protecting your peace of mind.
