First-time buyer? A plain-English mortgage guide

To buy your first home in the UK you need a deposit of at least 5% of the price, an income that passes the lender's affordability test, a credit file with no recent serious problems, and roughly 2,000 to 4,000 pounds of extra cash for legal work and surveys. The journey runs from agreement in principle, to offer accepted, to full application, valuation, underwriting and a formal mortgage offer, then exchange and completion. Twelve to sixteen weeks from accepted offer to keys is normal.

Lenders price mortgages by loan to value, or LTV. A 5% deposit on a 250,000 pound home is 12,500 pounds and gives you a 95% LTV mortgage. A 10% deposit is 25,000 pounds and a 90% mortgage.

That distinction matters more than most people expect, because pricing comes in bands. Rates typically improve at 90%, again at 85% and again at 75%. Moving from a 95% mortgage to a 90% one can shave a meaningful amount off your monthly payment for the whole of a two or five year fixed period. So it is worth doing the sum both ways before you rush in. If saving another 12,500 pounds takes you eight months and drops your payment by 60 pounds a month, that is 3,600 pounds saved over a five year fix.

Set your deposit aside in a separate account from your fees money. People routinely raid one for the other and then find themselves short on completion day.

Step two: understand what you can actually borrow

Most lenders start from an income multiple, commonly around four to four and a half times gross annual income. Some go higher for higher earners, for certain professions, or on specific products, but that is a ceiling rather than a promise.

The number that decides your case is affordability. The lender takes your income, subtracts your committed outgoings (credit cards, car finance, personal loans, childcare, student loan repayments) and then stress tests the payment at a rate above the one you are being offered, to see whether you would still cope if rates rose.

Here is what that looks like. Two people earning 30,000 pounds each have a joint income of 60,000 pounds. At four and a half times, the headline figure is 270,000 pounds. Add a car finance agreement costing 300 pounds a month and the maximum can fall by something in the region of 15,000 to 20,000 pounds, depending on how that lender treats the commitment. Clearing a small debt before you apply often unlocks more borrowing than putting the same money into your deposit.

Pull your credit report from all three main agencies. They do not hold identical data. Check you are on the electoral roll at your current address, that old accounts you closed are actually showing as closed, and that no defaults or missed payments are recorded in error. Adverse credit stays on your file for six years, so if you had a default four years ago, you are not blocked, but your options narrow and you may need a specialist lender.

Lenders will usually want three months of bank statements. In that window, avoid gambling transactions, avoid going over an agreed overdraft, and do not take out a buy now pay later agreement. Underwriters read statements line by line.

An agreement in principle (AIP, sometimes called a decision in principle) is a lender's indication of what it would lend you based on a soft check of your details. It is not binding and it is not an offer, but estate agents in most of the country will not take you seriously without one.

Getting one usually takes minutes online or with a broker. Most last between 30 and 90 days and can be refreshed. A soft-searched AIP does not damage your credit file, though some lenders do run a hard search, so ask which kind you are getting.

Once your offer is accepted, the property is taken off the market in England, Wales and Northern Ireland only by convention, not by law, so momentum matters. In Scotland the system is different, with offers usually made through a solicitor and becoming binding at conclusion of missives, which happens much earlier in the process.

You now need to do three things quickly: instruct a conveyancer, submit your full mortgage application, and get your paperwork together. Expect to supply photo ID, proof of address, three months of payslips and bank statements, your latest P60, and evidence of where your deposit came from. If you are self-employed, most lenders want two years of accounts or tax calculations plus tax year overviews.

The lender instructs a valuation to check the property is worth what you are paying. That is for their benefit, not yours. It is not a survey, and it will not tell you whether the roof is sound.

You choose your own survey separately. A homebuyer report on a typical modern house costs roughly 400 to 900 pounds. A full building survey on an older or unusual property costs roughly 700 to 1,500 pounds. On a Victorian terrace or anything with an extension of unknown provenance, the higher spend is usually money well spent, because it gives you evidence to renegotiate.

Underwriting is where a human reviews everything. Extra questions are normal and do not mean you are being refused. A formal mortgage offer typically arrives two to six weeks after full application, and is usually valid for three to six months.

Your conveyancer runs local authority searches, checks the title, raises enquiries with the seller's solicitor, and arranges the property tax return. Searches can take anywhere from a few days to several weeks depending on the local authority, and they are a common cause of delay.

At exchange, you pay your deposit to the conveyancer and the sale becomes legally binding. Completion is usually one to four weeks later, though same-day exchange and completion happens. You need buildings insurance in place from exchange, not from completion, because the risk becomes yours at that point.

Your first mortgage payment is usually taken about a month after completion and is often slightly larger than normal, because it includes interest from the completion date to the end of that month.

• Applying for new credit between the mortgage offer and completion. Lenders can and do re-check.
• Budgeting for the deposit and forgetting the 3,000 pounds of fees.
• Taking the estate agent's in-house broker without comparing, when their recommendation may be tied to a limited panel.
• Choosing a two year fix purely because the rate looks lower, without thinking about whether you will want to move within two years.
• Ignoring the lease on a flat. Anything under about 80 years remaining gets expensive to extend and some lenders will not touch it.

Whichever route you take, the value of good advice here is that a broker sees which lenders currently suit your exact situation, which changes constantly. You can use the MortgageMatch directory to find an FCA-authorised broker near you and compare a couple before you commit.