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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.
Interest rate types
Other mortgage types
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 5 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.
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.
If you're a first time buyer in England and Northern Ireland, you will not have to pay Stamp Duty on the first £425,000 of a property's purchase price. For a property purchase above £425,000 and up to £625,000, Stamp Duty of 5% will apply.
If the purchase price is over £625,000, you will pay Stamp Duty at the home mover rate. The first time buyer Stamp Duty relief does not apply.
If you live in Wales, you won’t pay Land Transaction Tax (LTT) on residential properties where the purchase price is less than £225,000.
In Scotland, 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.
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.
- How many bedrooms and bathrooms do you need?
- Will you need a driveway for parking?
- Would you like a garden or private outdoor space?
- Do you want a new build or an existing home?
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.
At this point, you can get a little help from a mortgage and protection 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 usually takes between three and six weeks.
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.
After exchanging
Your conveyancer will do some final work before the keys are handed over, including:
- Transferring remaining money
- 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 initial 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.
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.