Mortgages as a first-time buyer: Everything you need to know

Having your personal finances in order is key when buying your first home (Picture: Getty Images)

Buying a property is a big decision, so it’s important to do your homework and prepare as far in advance as possible.

Buying a home may start years in advance while you save for the deposit, legal costs, and household furnishings — often costing more than you think.

Some first time-buyers may be fortunate enough to have the help of the Bank of Mum & Dad but even then, parents may need time to save or access their funds.

Here’s what you need to know before you start.

What lenders want

If you want to secure a mortgage, lenders will need to see evidence of your income to check regular overtime and bonuses.

They will review your bank statements to help establish your lifestyle and to check outgoings such as credit/store cards and loans, including buy now, pay later arrangements.

Generally, a lender will need to see three months’ payslips, six months’ bank statements, proof of residency, company accounts and a copy of your passport.

Woman using contactless payment, close up

Lenders will want to review your spending habits (Picture: Getty Images)

What do you spend?

Set aside time to look at all your monthly outgoings, including a realistic amount per month that you can live comfortably on.

Put together a simple spreadsheet, which includes all your bills, spending, debt repayments, income sources and of course spending on leisure activities!

Checking you out

Most lenders will undertake a credit score and it is important that this is sufficiently high for banks or building societies to lend to you.

Make sure that you don’t miss any payments, you aren’t carrying too much debt (unsecured loans and credit cards — don’t forget that BNPL deals count) and you have a good credit history.

It’s easy to check your score, just go online and register on websites such as Experian, Equifax or Clearscore.

Much will then depend on two key factors — employment status and your credit score.

Having a regular income and being in full-time employment is the ideal but many lenders recognise that thousands of people are self-employed so whilst it is harder to get a mortgage and you may not secure the best rates, it certainly isn’t impossible.

Smart Phone Showing Credit Score On A Screen

You can easily check your credit score online (Picture: Getty Images/iStockphoto)

Work out what you can afford

When you are ready to look at property, do a quick calculation using an affordability app — like the Censeo App — that any good mortgage broker specialising in affordable home ownership products will have.

This will let you know what you can afford and roughly what your monthly outgoings will be.

You’ll be able to do the exciting part — looking for a home you know you can afford with the aid of property portals like or Homes for Londoners.

Ready to proceed

Once you’ve found your dream home, a more detailed affordability assessment is recommended.

Go online and visit Censeo’s easy-to-use online portal. If you’re choosing shared ownership home, it will tell you if you are eligible to buy a shared ownership property or not.

It will also assess your ability to afford and sustain the mortgage, rent and service charge alongside existing financial commitments.

Getting an offer

Once offered the property you’ll have 28 days to gain a mortgage offer. The best way is through a specialist mortgage broker as you need sound financial advice.

Having access to all lenders, their experience saves you time and possibly money as they know the lending criteria. The process of securing a mortgage is in two stages, first an agreement in principle, then the full mortgage application.

Don’t get carried away

While and after the mortgage is issued, many make the mistake of buying furniture for their home.

This is natural but taking out loans or maximising credit cards can invalidate mortgage offers so be careful. Finally, you need to protect you and your home with insurance.

Rupi Hunjan is founder and CEO of Censeo Financial, an award-winning mortgage broker specialising in shared ownership and affordable home ownership.

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