First time buyer guide
getting started.

It’s one of the most exciting things you’ll do. But there’s so much to think about when buying your first property – especially getting a mortgage.

Here are the main things you need to know about mortgages. By understanding your options, you can make the right choice and plan well for the future.


What you need to know

  • Your needs are unique. That's why it's important to know how mortgages work and the options you have available.
  • There are different costs involved when buying a home. You can prepare for this by budgeting properly. If you need any help, we have a budgeting tool to get you started.
  • Your mortgage should suit your needs. That’s why choosing the right mortgage is so important. For example, you may want the security of a fixed interest rate. Or you may prefer a variable rate where the amount you pay could fluctuate each month.
  • There’s lots of help available for first time buyers. For instance, the Help to Buy Scheme or the Help to Buy ISA could make it easier to get your foot on the ladder.

Want to talk it over?

You can speak to one of our mortgage advisers in person, or chat things over on the phone.

Call us on 0345 850 3705 (Mon-Fri 8am – 8pm, Sat 9am – 4pm) or you can book a branch appointment.

What is a mortgage?

  • A mortgage is a loan taken out to buy property or land. Most run for 25 years – known as the 'term' – but can be shorter or longer.
  • The loan is ‘secured’ against the value of your home until it is paid off.
  • You will be charged interest on the money you borrow. The higher the mortgage rate, the more you pay in interest. The quicker you pay off your mortgage, the less interest you pay.

What should I think about when applying for a mortgage?

  • Mortgages can last for a long time, so it's important to choose one that's right for you.
  • You'll need to think about the type of mortgage you want, how long you want it for, and what type of interest rate is best for you.

Mortgage terms

  • Mortgage terms can run for up to 40 years.
  • With a repayment mortgage, the longer the term, the lower the monthly payment. However, because it takes longer to pay off the loan, you will pay more interest. That means it will cost more over the life of the mortgage.
  • With an interest-only mortgage, the term you choose makes no difference to the amount you pay each month. That’s because you will only be paying off the interest charges, not the loan itself. With an interest-only mortgage, you need to have a plan in place to pay back the loan. For example, this could be savings or a pension. The mortgage term should match this plan: the amount of time when you will have enough money to repay the loan.
  • The mortgage term you choose should expire at a time when there will be enough money in your plan to repay the loan.

Ways you can repay

There are three ways you can repay your loan: repayment, interest-only, or you can combine the two:

  • Repayment mortgages
    • Each month, you'll pay an extra amount on top of the interest. This extra amount pays off the loan over the life of the mortgage.
    • During the early years of your loan, your monthly payment is mostly used to pay off the interest. However, as the loan is repaid, the interest becomes less. Which means more of your monthly payment is used to pay off the mortgage.
  • Interest-only mortgage
    • Each month, you only pay off the interest, with the mortgage loan being repaid at an agreed time in the future. You must have a plan in place to repay the amount you borrow. This is regularly reviewed to make sure you're on track to pay off the mortgage balance.
    • It's your responsibility to pay off the loan when the mortgage ends. If you don’t, you may have to sell your property.
    • You can only get an interest-only mortgage if the loan you want is less than 75% of the property's value.
  • Part repayment and part interest-only mortgage
    • You can also combine both types of repayment. For this, your mortgage is split into two parts: capital and interest repayment and interest-only repayment.
    • This means at the end of the mortgage term, you'll still have some of the mortgage to pay off.
    • You'll need to do this using a lump sum (one payment).
    • As with an interest-only mortgage, you need to have plan in place to repay this amount at the end of the term.

We have different types of mortgages with different types of interest rates. These change from time to time. We'll let you know what's available when you apply.

When you have your mortgage appointment, your mortgage adviser will find out what mortgage is right for you. You’ll discuss the various types of mortgages, interest rates and any associated fees.

There are two main types of mortgage:

Fixed rate mortgage

  • The interest rate is fixed for a set time. This means you can plan your finances with more certainty, as your monthly payments won't change. The fixed rate usually lasts for 1 to 5 years, but sometimes longer.
  • Once the fixed rate ends, we switch you to another rate, usually one of our lender variable rates. Your new interest rate may be higher or lower than the rate you’ve been paying. Prepare for any change and keep this in mind when budgeting.
  • When you fixed rate period ends, you may want to apply to move your mortgage to a new fixed rate product for a further period of time or you could keep your it on the variable rate.

Tracker mortgage

  • This mortgage follows the Bank of England base rate, meaning the interest rate is variable. Therefore, you could save money if the base rate is low. Or you could pay more if the base rate is high.

Use our mortgage calculator to see our current mortgage deals. You can get an idea of how much you could borrow and compare what the monthly payments will be.

Special offers

From time to time, we may include a special offer with our mortgages. The interest rate for these mortgages may be a bit higher than usual. So you'll need to think about what's more important to you: a mortgage with a special offer, or a mortgage that may have a lower interest rate.

Find out more about our special offers for first time buyers.

There are various properties for you to choose from. We'll value the property before deciding if we can lend to you.

Self-build mortgage

If you are building a new house, some schemes will offer you the money in stages. This means you’ll get some of the money as work on the house progresses. We’ll visit the property and check the progress, based on the agreed terms.

When the property is finished and you’re living in it, you can then apply for a mortgage with us. You will need to be eligible and choose a mortgage that’s available at the time.

Buy to let mortgages

A buy to let mortgage is a loan to buy a property that you will rent out to tenants. The most you can borrow is linked to the amount of rental income we think you could earn. Investing in buy to let property is a risk. You should be an experienced house buyer and know about investment properties.

These mortgages aren't available to first time buyers or anyone under the age of 25. At least one person applying for the mortgage must currently own a property in the UK.

Shared ownership

Shared ownership is usually offered by registered social landlords or local authorities. With this type of mortgage, you buy a share of a property – say half – and pay less rent for the other share. The share you first buy may be as little as 25%. But you can buy more shares until you own the entire property.

Shared equity

Usually you own 100% of the property and so there is no rent to pay like under a shared ownership scheme. The shared equity part relates to the fact you’re taking out an equity loan which counts towards your deposit.

The advantage is that you often only need to raise a 5% deposit yourself, with the equity loan making up the rest of the deposit.  But if property prices rise over the next few years, the size of your loan will increase too. This means that in the long-term you may end up having to pay more under a shared equity scheme, than if you were just to save up a bigger deposit and get a standard mortgage.

The government offer an equity loan scheme and some property developers also offer their own shared equity schemes, as it helps them sell the homes they have built.

New-build or converted properties

To get a mortgage on a property that's been built or converted in the last ten years, it should be part of a building standards scheme. This tells us that the building was completed to good standard, by a qualified professional. Ask your estate agent if this applies to the property you’re interested in.

How much do I need to save for my deposit?

  • We'll only lend you a percentage of what you need to buy the property. We base this percentage on the value of the property or how much it is sold for (whichever is lower). So you'll need to use some of your own money to buy the property – a deposit.
  • We usually ask for at least a 5% deposit from your own money. However, if you can pay more, you could get a cheaper mortgage.
  • Our Mortgage calculator will give you an idea of how much you can borrow and what your monthly mortgage payments could be.
  • There are government backed schemes designed to help you save your deposit faster. To find out more, see our ‘getting some help’ section of this guide.

Other Costs

As well as your deposit, there are other costs involved in buying a property and taking out a mortgage. Here are some costs that apply to most buyers:

Product Fee

Some mortgages also have a fee. You pay this when you apply. Most fees can be added to the total amount you pay back. Keep in mind: by adding the fee to your total mortgage amount, you will pay interest on it over the term.

Valuation Fee

The valuation fee depends on the property's value and the type of valuation you choose.

There are three levels of valuation you can choose and these rise in cost: A valuation report which is required to value the property, but gives you limited information; A survey and valuation (often referred to as a Homebuyers report) which tells you information such as defects and problems that are serious or that may significantly affect the value; Building survey which is a detailed report that can be tailored to fit your needs but is the most comprehensive type of survey.

You'll be able to discuss valuations and fees with one of our mortgage advisers when you apply, but to get more information and an idea of the cost of valuation fees, please visit our valuation schemes page.

Legal/Conveyancing Fees

To get a mortgage, you'll need a conveyancer (solicitor) to take care of the contracts and documents. The costs can vary between different conveyancers, so its important to look at what is included in any quotes if you are comparing.

Search fees and Land Registry fees and typical expenses that you will incur as part of the conveyancing process and typically included in quotes you receive.

You can use our conveyancing service to compare quotes for your legal costs from our panel of up to 200 conveyancers.

Removal costs

You may want to use a removal company to help you move into your new home. Costs can vary, so get a few quotes to compare prices.

Stamp duty

If you are buying or selling a property, there will be Stamp Duty Land Tax payable. This is a government tax charged on land and property transactions in the UK. The tax is charged at different rates and has different limits for different types of property and values of transaction.

This tax is an expensive extra cost that you should take into account when thinking about buying a property.

For the most up-to-date Stamp Duty limits visit the government’s website, or for properties in Scotland, visit the Revenue Scotland website

You can get an idea of some of these costs by using our Mortgage calculator - you’ll need to enter details about the property cost and your deposit under ‘how much will it cost’. The the results will then show in the ‘What else should I budget for?’ section of the mortgage summary.

The Mortgage Amount and Monthly Payments

Budgeting

To help you prepare for the different costs involved when buying a home, it’s important you budget properly. If you need any help, our budgeting tool is a good place to start.

Helping you to take the first step on the ladder

Help to buy schemes are set up by the government to help you buy your first home. There are four schemes available:

Your home may be repossessed if you do not keep up repayments on your mortgage.


The next step

Now you know how much you can borrow and you’ve saved enough for your deposit, it’s time to start house hunting.


MORTGAGE CALCULATOR.

Use our mortgage calculator to see our current mortgage deals. You can get an idea of how much you could borrow and compare what the monthly payments will be.