UK Mortgage Guide

Getting Your Foot On The Property Ladder – A Guide To Mortgages For First-Time Buyers

Getting Your Foot On The Property Ladder – A Guide To Mortgages For First-Time Buyers

Introduction – First-time buyers guide

How often have you heard the expression “An Englishman’s home is his castle”? This proverb says a lot about our culture and how we view the importance of home – it’s more then just a roof over our head and a place to stay. Increasingly this idea of home is associated with the idea of home ownership but this wasn’t always the case. Until relatively recently, home meant a place that you rented – often for the whole of your life – and not one that you bought. In fact, the idea of owning your own property wasn’t something that would ever have crossed the minds of the vast majority of the working classes.



How did the radical change in people’s perception of home ownership come about?

Chapter 1 has a detailed explanation of the changing state of the housing sector in the UK – from private renting to public (council) houses and finally, mass home ownership. What changes in society fueled this trend and equally importantly, what does the future hold for housing in the UK?

Decisions to make before buying a house

Before you enter the housing market, there are a number of key decisions you have to make. Firstly, you should consider whether you’re ready to buy a home. We weigh up the pros and cons of buying property and compare home ownership with renting so you can decide what is the best for you in your circumstances.

An approved mortgage application form

The second thing you have to think about before you even apply for a mortgage is whether to buy a home alone or with someone else. We explain the benefits and pitfalls of joint tenancy and what safeguards you should take to protect yourself and your investment. We also explain the solutions if you’d prefer to live alone but might not be eligible for a mortgage on your salary. We look at shared ownership schemes and what help could be offered by your family.

How can you prepare for your mortgage application?

In view of problems created by lenders awarding mortgages to high-risk borrowers before the 2008 Credit Crunch, gone are the days when you could waltz into a High Street lender and come out an hour later with a 100% mortgage. The criteria for eligibility are now much stricter. However, this set of articles can guide you through the whole process so your mortgage application is more likely to be granted. From how to save for a deposit easily and quickly to the importance of making sure your credit record is healthy, we give useful tips to help you climb onto the first – but very difficult – rung on the property ladder.

What are the government help to buy schemes?

There are a number of schemes available to help the first-time buyer. You will probably have heard of Help to Buy ISAs, Help to Buy equity loans and First Steps London but have you heard of the latest schemes: Life-time ISAs and the Starter Home Scheme? We have the most up-to-date information about these older and new government initiatives and explain fully who’s eligible, how to apply for them and their advantages and disadvantages.

Social housing tenants may be entitled to discounts on the property’s price

Apart from this help, we devote a separate chapter to schemes run by local councils and housing associations. Apart from explaining shared equity schemes, we also look at Right To Buy and Right to Acquire schemes which allow you to buy your council or housing association rental property. If you’ve been a tenant of social housing for more than 3 years, did you know you could be entitled to discounts of up to 30% on the market price of the property?

Understanding mortgages

Mortgages are complex financial products and unless you have an understanding of the different products on the market, it’ll be very difficult for you to assess, judge and compare the ones which are available. We explain the most common types of mortgage on offer from lenders so you can make an informed choice as well as explaining the most frequently-used terminology. We also weigh up the benefits and drawbacks of using a mortgage broker.

Applying for a mortgage

For your convenience, we’ve divided the process of applying for a mortgage into two halves. Chapter 10 concentrates on the early stages of your mortgage application from researching the market to applying for a ‘Decision in Principle’ (DIP) and what factors to take into account when you’re house-hunting (apart from affordability).

A picture of a UK street with houses, which prospective buyers can purchase with the help of a mortgage

The second chapter devoted to mortgage application (Chapter 11) starts with an explanation of making an offer on a property. In what circumstances can you offer a lower bid and how can you prevent yourself being gazumped so that you lose the house of your dreams and end up wasting money on valuation and structural surveys? We continue by taking you through the final stage of becoming a home owner: exchanging contracts and completion.

How much does it cost to buy a house?

You’ll probably already aware that mortgage providers expect you to have a deposit and you’ve probably heard of Stamp Duty (Land Tax) but have you really taken into account all the extra expenses which go hand in hand with purchasing a home? We examine the different types of survey, compare whether to use a solicitor or conveyancer to arrange the legal transfer of your property and give estimates for the different conveyancing fees. After this, we explain the different types of insurance – some are compulsory and some advisable – when you take out a mortgage. Finally, we give handy tips on saving money on removal fees and how to furnish your new home for little money.

Have you really taken into account all the extra expenses which go hand in hand with purchasing a home?

Problems with home purchases and mortgage repayments

Unfortunately, getting a mortgage and buying a house isn’t always plain sailing since you might have problems. We give solutions to people with a poor credit rating who wish to buy a home and also explain what you should do if your application for a mortgage is rejected.

In Chapter 13 we give advice to mortgage holders who are finding it difficult to make their mortgage payments with ideas to help you get by. We then consider the problem of getting into arrears and what you should do if you can’t make the mortgage because you can’t work. For example, because of an accident or chronic illness. What help can you expect from the state to see you through this tough patch? Finally, we give solutions if your financial difficulties will be long-term before talking about repossession and how there’s still hope even if a court order has been issued by your lender.



A case study – Meet Rob and Liz!

Still not convinced that you’ll ever get a mortgage? Don’t take it from us, take it from Rob and Liz who are two first-time buyers who’ve just moved into the house of their dreams by using the Help to Buy equity loan. Read all about their experiences in Chapter 14.

Using this guide to mortgages for first-time buyers

If you wish for an overview of the mortgage industry, its regulation and how a mortgage works, you should turn to Chapter 2. Alternatively, you could refer to the table of contents to look at the specific aspect of making a home purchase you’re interested in.

It might seem daunting before you start but with the help of this guide, your application is more likely to succeed and our tips about every aspect of the mortgage application process will save you money at the same time.

Table of Contents:

Chapter 1: The history of mortgages in the UK

Chapter 2: An overview of how mortgages work and their regulation in the UK

Chapter 3: What are the pros and cons of buying property?

Chapter 4: Buying a house with someone else – What are your options?

Chapter 5: How to save for a mortgage deposit easily and quickly

Chapter 6: Applying for a mortgage – What lenders take into account and your credit rating

Chapter 7: Help to buy schemes and what they can offer you

Chapter 8: Help through home purchase schemes run by local authorities

Chapter 9: What different types of mortgage are available in the UK?

Chapter 10: The early stages of mortgage application – What to do

Chapter 11: The later stages of mortgage application – From making an offer to completion

Chapter 12: What are the hidden costs of home purchases in the UK?

Chapter 13: Guidance and solutions if you’re struggling to make your mortgage repayments

Chapter 14: Liz and Rob’s story – First-time buyers explain how they did it

About the author

Thomas Henderson

Thomas worked as a consultant in personal finance in the UK for 18 years. He has found a passion in sharing his experience on familymoney.co.uk

Thomas also takes pleasure in woodworking, reading and observing stock market trends.

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About The Author

Thomas Henderson

Thomas worked as a consultant in personal finance in the UK for 18 years. He has found a passion in sharing his experience on familymoney.co.uk

Thomas also takes pleasure in woodworking, reading and observing stock market trends.

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