First time buyer mortgage guide

Buying your first home is one of the most exciting things you'll do. There's lots to think about, including finding the right mortgage for you. Find out everything you'll need to know when buying your first home here.

What is a mortgage?

A mortgage is a loan that you take out to buy your home. It’s secured against the value of your home, until you pay it off.

You’ll be charged interest on your monthly repayments. The higher the interest rate of your mortgage, the more interest you’ll be paying each month. The quicker you pay off your mortgage, the less interest you’ll end up paying overall.

It’s important that you keep up with your payments. If you don’t, your lender could repossess your home, to sell it and get their money back.

What is a mortgage term?

A mortgage term is the period your loan will be paid back over. The length of time can vary. Many last between 20-30 years, although some people take a shorter term and others up to 40 years.

The longer your term, the lower your monthly repayments. Be aware that if you choose a longer term, you’ll pay more interest.

With most mortgages, you’ll have paid back your loan in full when the term ends.

Types of mortgage

Everyone loves choice when it comes to their money. Luckily, there are a few different mortgage types to choose from:

Repayment

  • You repay the amount you borrowed, with interest, over a set term

Interest only

  • You only pay back the interest on your loan each month, then pay the full amount you borrowed at the end of the term

Repayment mortgage types

Tracker

  • The interest you pay each month will change, depending on the Bank of England base rate

Offset

  • You pay interest on the amount you borrow, minus the money that is in a linked savings account

Fixed rate

  • The interest you pay every month will stay the same, for an agreed term

Other mortgage types

Shared ownership

  • You buy between 25 and 75% of your home, make repayments based on the share you own, then pay a reduced rent to a housing association on the share you don’t own

Buy to let

  • You take out a mortgage on a property you won’t live in. This property is then rented out to tenants

How much do you need for a mortgage deposit?

A mortgage deposit is a sum that you pay up front, to help pay for the home you’re buying. You then borrow the rest and make monthly mortgage repayments with added interest.

The bigger your deposit, the less you’ll have to borrow using a mortgage. You usually need a deposit that is between 10 and 20% of the full property value. You may be able to access schemes which allow you to use a smaller deposit.

Use our mortgage calculator to help work out how much your mortgage repayments could be after you’ve paid a deposit.

Getting a mortgage Agreement in Principle

A mortgage Agreement in Principle is the first stage of getting a mortgage. This is where your lender tells you how much they might lend you.

It’s a written statement that lets you know how much you’ll be able to borrow and over how long. This can help you work out what home you can afford to buy with the deposit you have. Most estate agents will want you to have an Agreement in Principle to help you find a home. This so they know what your budget is and can narrow their search accordingly.

The amount quoted is not guaranteed and is subject to a full mortgage application.

You could apply for an Agreement in Principle in 15 minutes. You’ll need to provide the following:

  • Your monthly income
  • Your monthly outgoings
  • Addresses for the last three years

An Agreement in Principle does not affect your credit score.

You could lose your home if you don’t keep up your mortgage repayments

Stamp Duty for first time buyers

Stamp Duty is a tax you pay in England and Northern Ireland when you buy a property. In Wales, you’ll pay Land Transaction Tax (LTT) and in Scotland, you’ll pay Land and Buildings Transaction Tax (LBTT) instead.

From 1st July 2021, first time buyers will not pay any Stamp Duty on the first £300,000 of a property’s purchase price and then 5% for any amount above £300,000 up to £500,000. If the purchase price is over £500,000 you will pay Stamp Duty at the home mover rate.

In Wales, from 1st July 2021, you won’t pay Land Transaction Tax (LTT) on residential properties where the purchase price is less than £180,000.

In Scotland, from 1st April 2021, you won't pay Land and Buildings Transaction Tax (LBTT) on the first £175,000 of the residential property purchase price.

Check out the latest Government guidelines for the Stamp Duty rates.

Who is classed as a first time buyer when paying Stamp Duty?

If you’re buying a house alone and you’ve never owned property or land, you’ll be classed as a first time buyer. If you’ve inherited property or land, you won’t be classed as a first time buyer.

If you’re buying with a partner, both of you need to be first time buyers to qualify. If one of you isn’t a first time buyer, you might have to pay Stamp Duty.

Picking the right house

When your Agreement in Principle is in the bag, you can start looking for your dream home. Check out the online property listing sites out there, including:

They let you search for properties by:
 
  • Listing price
  • Area
  • Number of bedrooms
  • Distance from amenities

Talk to your nearest estate agent too. They might be able to tell you about properties that aren’t listed online yet.

Before you search, start thinking about the type of home you want. This will help make your search quicker and easier.

  1. How many bedrooms and bathrooms do you need?
  2. Will you need a driveway for parking?
  3. Would you like a garden or private outdoor space?
  4. Do you want a new build or an existing home?
Our location finder can also help you to learn more about the neighbourhood too.
 
  1. How close is it to local schools, supermarkets and doctors?
  2. What is the area like? Are there any noise problems nearby?
  3. Does it have good transport links for your commute to work?

Making an offer on a home

Found a home that tops your list? It’s time to make an offer. First, you need to decide how much you want to offer. Think about the following when you’re making an offer:

  • Compare your property to others that are for sale in the area
  • Decide on the maximum price you can pay, using your Agreement in Principle
  • Look at what improvements the home will need and how much they’ll cost
  • Think about how much you’ll be paying in bills and mortgage payments too

Once you’re ready, give the estate agent a call and send an email to make an offer. Let them know where you’re at in the buying process and provide your Agreement in Principle and proof that you have your deposit.

The seller might accept your offer or look to negotiate on the price. Either way, the estate agent will let you know.

If they accept, you can still change your mind. But if you’re happy to go ahead, you can find a conveyancer and apply for your mortgage.

If you’re buying a home in Wales or Scotland this process might change as there are different property laws in place compared to England.

Hire a conveyancer

You’ll need a conveyancer to carry out all the legal work needed to buy a home. A conveyancer will handle the deposits, arrange contracts, and transfer the deed of the property from the seller to you.

Search more than 200 conveyancers with the Halifax Converyancing Service.

Applying for a mortgage

If you’ve not already arranged a mortgage Agreement in Principle, or you applied for one over 90 days ago, you’ll need another one now.

You’ll need to get an Agreement in Principle from the same lender you’re applying for a mortgage with.

To apply for a mortgage, get all your documents together, ready for your lender to look at.

  • A form of ID
  • Past three to six months of bank statements
  • P60 tax form
  • Utility bills
  • Proof of benefits (if you receive them)
  • Contact details for your solicitor, estate agent and seller

If you're self-employed, you’ll need a few more things.

  • Two to three years of tax forms
  • SA302 tax return form
  • Bank statements to support these tax return documents

At this point, you can get a little help from a mortgage adviser. They can help you find the best deal for your budget and handle your application after you’ve made an offer.

They can keep track of your application and arrange a valuation of the property you’re buying. Your lender will then make you a formal mortgage offer, based on all the information you’ve given them. The process only takes between three and six weeks.

Getting a property valuation

When you take out a mortgage, your lender will need a surveyor to inspect and value the home you’re buying. 

Mortgage valuation

A basic valuation that often doesn’t include structural issues.

Will give you limited information about the property and may not highlight any defects or problems it has.

If you want one, you’ll also need to sort out your own survey and valuation.

Survey and valuation

Often called a Homebuyers Report, this gives you information about any issues that could affect the property’s value.

You will get a full report with all the in-depth findings.

Building survey

The most detailed survey, this can be tailored to suit your needs.

Building surveyors will be members of the Royal Institute of Chartered Surveyors.

Your surveyor will ask what kind of report you want, before the survey takes place.

For more information on valuation schemes and their costs, talk to your mortgage advisor.

Exchanging contracts and completion

Exchanging contracts is one of the final stages of buying a house. It’s a simple process where you will sign a contract saying that you agree to buy the house.

Likewise, the seller signs a contract saying they agree to sell the house. These contracts will then be “exchanged” between the legal representatives on both sides and you are legally obliged to buy the property.

Before you exchange

You'll need to hire a conveyancer to carry out some legal work for you. They'll need to:

  • Contact the seller's conveyancer and check the documents they've sent
  • Carry out a local and drainage search of the property and report back to you
  • Check your mortgage offer letter from your lender and ask you to sign a copy

You should also have Buildings Insurance in place before you exchange contracts. Your conveyancer will ask for proof of this.

You’ll then need to pay your deposit to your conveyancer. They will handle sending this to the seller’s conveyancer.

When all the legal work is done, the purchase will go through. Before you pay your deposit, make sure that you’re happy with the contract and have:

  • The mortgage offer in writing
  • Had all searches completed by the conveyancer
  • Agreed a completion date

After exchanging

Your conveyancer will do some final work before the keys are handed over, including:

  1. Transferring remaining money
  2. Arranging mortgage deeds
From the day you exchange to the day you finally get your hands on the keys will usually be between 7 and 28 days.

Moving in

It’s finally here, the big moving day! It always feels like there’s so much to do. But when you split the tasks up, it can make things much easier.

 

Moving day

To start ticking off your moving day checklist, make sure you have enough boxes, bags, tape and bubble wrap. They’ll be a lifesaver when it comes to packing everything up. Here are a few other tips to help you.
 
  • Decide if you want to hire a removal firm or rent a van to move things yourself
  • Make sure the firm is fully insured. Or, if you’re using a van, make sure anyone driving it is insured
  • Take time to reroute your mail and let people know you’re changing address
  • Get meter readings for gas, electricity and water in your old home
  • Label all your boxes and pack up the things you won’t need right away, leaving the stuff you’ll need straight away until last
 

Your first mortgage payment

Your first payment will be a little higher than your normal monthly repayments. That’s because it includes an interest payment. This covers the interest for the days between moving in and your first payment.  

Let’s say you complete your move on the 15th. The interest will be charged from then until the end of the month and will be added to your first payment.

You’ll normally make your first payment on the day of the month of your choosing. If your first payment is taken on a different date to the one you’ve chosen, it’ll be taken on the agreed date next month.

 

Repaying your mortgage

When you start paying back your mortgage, your payments will come out automatically. However, there are a few ways you can change how and when you pay.

Manage your mortgage online

With Halifax, you can manage your mortgage online to make payments and check how much you’ve paid off. Register now and you can set up your account in a few minutes. 

Checking your balance

Want to know how much you’ve got to pay back? Check your mortgage balance with your Online Banking account.

Change your term

You may be able to change the term of your mortgage online. You can do this by paying more each month.

Mortgage overpayments

If you decide you want to pay a little more each month or take a big bite out of your mortgage with a one-off payment, you can do this online. Make sure you check the terms of your mortgage first, as Early Repayment Charges may apply.

Our mortgage overpayment calculator can help you understand how paying more could affect the interest you pay.

The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like the Money Advice Service.

Calculators and tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Halifax
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could affect your monthly payments
Use our calculators and tools

Speak to someone

You can talk to us over the phone or use our mortgage video service from the comfort of your own home.

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