The Mortgage Process for First-Time Buyers: A Step-by-Step Guide

Buying your first home is a significant financial commitment, and understanding how the mortgage process works can make the experience much easier to manage. From working out how much you can borrow to receiving your mortgage offer and collecting your keys, there are several stages to complete before you become a homeowner.

It is worth getting to grips with these steps before you start viewing properties. Knowing your budget, understanding the deposit you will need and having an idea of what lenders expect can help you make informed decisions and avoid unnecessary delays.

At Premier Mortgage Services, we help first-time buyers understand their mortgage options and guide them through the application process. In this guide, we explain what happens at each stage, what you need to prepare and how to move towards buying your first home with greater confidence.

1. Establish your budget before looking at properties

Before you start searching for your first home, work out how much you can realistically afford to spend.

There are two important figures to consider: the amount a mortgage lender may be willing to lend you and the amount you can comfortably afford to repay each month.

Lenders assess affordability using several factors, including your income, regular expenditure, existing credit commitments and personal circumstances. Some may also take the length of the mortgage term into account when calculating how much you can borrow.

Although borrowing is sometimes discussed in terms of a multiple of your annual salary, this is only a rough guide. Two people earning the same amount could be offered different mortgages because their financial commitments and circumstances are different.

Your own budget should also account for the costs of running a home. Mortgage repayments are only one part of the picture. Council tax, energy bills, water, broadband, insurance, maintenance and unexpected repairs can all affect your monthly finances.

If you are buying with a partner, consider your combined income and expenditure, as well as how you would manage the payments if either person's circumstances changed.

The aim is to find a property you can afford to maintain, not simply to borrow the maximum available.

Speaking to a mortgage adviser early can help you understand what may be achievable before you begin your property search. You can find out more about first-time buyer mortgages in Nottingham and the options available to you.

2. Work out how much deposit you need

Your deposit is the money you contribute towards the purchase price, with the mortgage covering the remaining amount.

For example, if you were buying a property for £200,000 with a 5% deposit, you would need £10,000 towards the purchase price. The remaining £190,000 would need to be covered by your mortgage, subject to the lender's approval and valuation.

A 5% deposit is available for some mortgage products, although the options open to you will depend on your circumstances and the lender's criteria. A larger deposit can increase the range of mortgages available and may give you access to lower interest rates.

However, saving a deposit is not the only financial consideration. You should also allow for the costs associated with buying a property, including legal fees, surveys, moving expenses and any applicable property taxes.

It is important to understand where your deposit is coming from, too. If a family member is helping you financially, the mortgage lender may ask for evidence of the funds and confirmation of whether the money is a gift or a loan.

If saving a conventional deposit feels out of reach, there may be alternative routes worth exploring. Depending on your circumstances, these could include certain low-deposit mortgages, shared ownership or other eligible purchase arrangements.

Read our guide to 95% mortgages in Nottingham to learn more about mortgages that require a smaller deposit.

3. Review your credit history

Your credit history is one of the factors lenders use when assessing a mortgage application. It helps them understand how you have managed borrowing and repayments in the past.

Before applying for a mortgage, it is sensible to check your credit reports and make sure the information recorded about you is accurate.

Look for any accounts you do not recognise, incorrect personal details, missed payments that have been recorded in error or other information that needs correcting. If you find a problem, allow time to investigate it before proceeding with an application.

There are also practical steps you can take to keep your finances organised:

• Make existing credit repayments on time.
• Keep up with regular household bills and other financial commitments.
• Avoid applying for unnecessary credit in the run-up to a mortgage application.
• Check that your address and personal details are consistent across your financial accounts.
• Be open about any existing borrowing when discussing your mortgage options.

A less-than-perfect credit history does not automatically mean you cannot get a mortgage. The effect will depend on the circumstances, including the nature of any adverse credit, how recent it is and the lender's criteria.

Equally, having a good credit score does not guarantee acceptance. Lenders assess the application as a whole, including affordability and the property being purchased.

If you have concerns about your credit history, discuss them with an adviser before submitting a full application. This can help you understand which options may be appropriate for your situation.

4. Speak to a mortgage adviser and obtain a Mortgage in Principle

Once you have a clearer idea of your finances, the next step is to explore your mortgage options.

A mortgage adviser can review your income, deposit, credit commitments and other relevant circumstances before identifying lenders and products that may be suitable.

At Premier Mortgage Services, we compare mortgage options from across the market, taking account of lending criteria as well as rates and fees. The aim is to identify an appropriate option for your individual circumstances rather than choosing a mortgage based on its headline interest rate alone.

An adviser may then help you obtain a Mortgage in Principle, also known as an Agreement in Principle (AIP) or Decision in Principle (DIP).

This gives an indication of how much a lender may be prepared to lend, based on the information available at that stage. It can be useful when deciding which properties to view and when demonstrating to an estate agent that you have started preparing your finances.

However, a Mortgage in Principle is not a formal mortgage offer or a guarantee that your application will be accepted. The lender will still need to assess your full application, verify the information you provide and consider the property.

It is worth discussing how the initial assessment will be carried out, including whether a credit check is required and what type of check will be used.

You can get started with Premier Mortgage Services to discuss your circumstances and the next steps towards finding a mortgage.

5. Start viewing properties within your budget

With a clearer idea of your borrowing options and deposit, you can begin looking for properties that fit your requirements.

It is easy to become focused on the purchase price, particularly when you are comparing homes in different areas. However, think about how each property would fit your lifestyle and finances beyond the initial purchase.

Consider the location, transport links, the amount of space you need and whether the property is likely to suit you over the coming years. You should also look at its general condition and whether any repairs or improvements may be needed.

If you find a property you like, ask questions about its condition and any known issues. You may also want to consider the age of the boiler, the condition of the roof and whether there are signs of damp or other problems.

Remember that a Mortgage in Principle is based on an initial assessment. It does not mean that every property you view will be suitable for mortgage lending. The lender will need to assess the specific property as part of the application process.

Taking your time at this stage can help you avoid committing to a property that does not meet your needs or stretches your finances too far.

6. Make an offer on your chosen home

Once you have found a property you want to buy, you can make an offer through the estate agent.

The amount you offer will depend on factors such as the asking price, your budget, the property's condition and your assessment of its value. There is no guarantee that an offer below the asking price will be accepted, so consider what you are prepared to pay before entering negotiations.

If the seller accepts your offer, the property will usually be marked as sold subject to contract. This means the transaction is progressing, but the purchase is not yet legally binding.

At this point, it is important to keep your mortgage adviser informed. They can review the agreed purchase price and help you move from the initial assessment to a full mortgage application.

You should also begin arranging the legal work required to buy the property rather than waiting until every mortgage check has been completed.

7. Submit your full mortgage application

After your offer has been accepted, you can proceed with the full mortgage application.

This is a more detailed process than obtaining a Mortgage in Principle. The lender will need evidence to support the information you have provided and will assess whether the mortgage is appropriate under its lending criteria.

The documents required will depend on your circumstances and the lender. They may include:

• Proof of identity, such as a passport or driving licence.
• Evidence of income, such as payslips, an employment contract or other relevant documentation.
• Bank statements showing your income and expenditure.
• Details of existing loans, credit cards and other financial commitments.
• Evidence of your deposit and, where applicable, its source.
• Additional documents requested by the lender to clarify your circumstances.

If you are self-employed or receive income from several sources, the lender may require different evidence to establish your income. This is one reason it is helpful to discuss your circumstances with an adviser before submitting an application.

Your adviser can help you understand the documentation required and assist with the application process. Responding promptly to requests for further information can also help prevent avoidable delays.

Once the application has been submitted, the lender will review the details and decide whether it can offer the mortgage.

8. Understand the property valuation and arrange a survey

As part of the mortgage process, the lender will normally arrange a valuation to help establish whether the property provides suitable security for the loan.

The valuation is primarily for the lender's benefit. It is not necessarily a detailed inspection of the property's condition, and it should not be treated as a substitute for an independent survey.

You may therefore want to arrange your own survey, particularly if you are buying an older property or one that appears to need repairs.

The type of survey you choose will depend on the property and the level of detail you want. A survey can help identify potential problems that may require further investigation or affect the cost of maintaining the home.

The lender's valuation can also affect the mortgage application. If the property is valued below the agreed purchase price, the lender may base its offer on the lower valuation rather than the price you have agreed to pay.

If that happens, you may need to discuss the options with your adviser and estate agent. Depending on the circumstances, these could include renegotiating the purchase price, contributing a larger deposit or reconsidering the purchase.

It is best to understand any valuation issues before committing to the transaction legally.

9. Instruct a solicitor or conveyancer

While your mortgage application is being assessed, a solicitor or licensed conveyancer will handle the legal side of the purchase.

Their work includes checking the property's legal title, carrying out the relevant searches, reviewing the contract and dealing with the transfer of ownership. They will also coordinate with the seller's legal representative and work towards exchanging contracts and completing the purchase.

You should choose your conveyancer carefully and make sure you understand the fees involved. Ask what is included in the quote and whether additional costs may arise during the transaction.

Your conveyancer will also explain the legal commitments involved in buying the property and tell you what is required from you at each stage.

Mortgage approval and conveyancing are separate processes, although they need to progress alongside each other. You should keep both your mortgage adviser and conveyancer updated if anything changes that could affect the purchase.

10. Receive your formal mortgage offer

Once the lender has completed its assessment and is satisfied with the application, it may issue a formal mortgage offer.

This sets out the terms on which the lender is prepared to provide the mortgage. It will include details such as the amount being lent, the interest rate, the mortgage term and any conditions that need to be met.

Read the offer carefully and ask your adviser to explain anything you do not understand. You should also make sure you understand whether the interest rate is fixed or variable, when any introductory rate ends and what charges or restrictions may apply.

A formal mortgage offer is an important milestone, but it does not mean you should stop paying attention to the rest of the purchase process. Your conveyancer will still need to complete the legal work, and any conditions attached to the offer must be dealt with.

If your financial circumstances change significantly before completion, tell your adviser promptly. Taking on new borrowing or changing employment arrangements could affect the lender's assessment, depending on the circumstances.

11. Exchange contracts and prepare for completion

Once the legal work is sufficiently advanced and the necessary arrangements are in place, your conveyancer can work towards exchanging contracts.

This is a major stage in the purchase because exchanging contracts makes the transaction legally binding. Your conveyancer will explain the commitments involved, confirm that you are ready to proceed and arrange the required deposit transfer.

A completion date will also be agreed as part of the transaction.

Before exchange, make sure you understand the financial and legal commitments you are making. You should have confirmed the funds required, checked the arrangements for transferring money and discussed any outstanding questions with your conveyancer.

You should also make practical preparations for moving, including arranging removals and organising the transfer of utilities where appropriate.

Buildings insurance may be required as part of your mortgage arrangements, so check the lender's requirements and the advice provided by your adviser and conveyancer.

12. Complete the purchase and collect your keys

Completion is the day the purchase is finalised.

Your mortgage lender releases the funds in accordance with the arrangements made by your conveyancer. The remaining purchase money is transferred to the seller's legal representative, and once completion has been confirmed, the estate agent can release the keys.

You can then move into your new home.

There will still be a few practical tasks to deal with, such as updating your address, arranging utilities and keeping important property documents somewhere safe. You should also make sure you understand when your first mortgage payment is due and how the lender will collect it.

Once you have moved in, it is worth reviewing your household budget again to account for the actual costs of running the property. Keeping some money available for maintenance and unexpected expenses can help you manage homeownership over the longer term.

How long does the first-time buyer mortgage process take?

There is no single timescale that applies to every purchase.

The time required depends on factors such as how quickly you find a property, the complexity of your mortgage application, the lender's processing times and the progress of the legal work.

Some stages may be completed relatively quickly, while others depend on information or decisions from several parties. Delays can occur if documents are missing, additional checks are required, searches take longer than expected or issues arise with the property.

You can help the process run more smoothly by preparing your documents early, responding promptly to requests and keeping in contact with your adviser and conveyancer.

It is also sensible to avoid making firm moving arrangements until you have a clearer understanding of the likely completion date.

Common questions about getting your first mortgage

Can I get a mortgage before finding a property?

Yes. You can speak to a mortgage adviser and explore your borrowing options before you start viewing homes. A Mortgage in Principle can help you understand your likely budget, although it is not a guarantee of a formal mortgage offer.

Do I need a mortgage adviser as a first-time buyer?

You are not required to use a mortgage adviser, but professional advice can help you understand the options available and identify products that fit your circumstances. A whole-of-market adviser can compare options across the lenders they have access to and help you navigate the application process.

Can I get a mortgage with a small deposit?

Some mortgages are available with a deposit of 5%, and other low-deposit options may be available to eligible applicants. The products you can access will depend on the lender's criteria, your finances and the property. A smaller deposit can also affect the interest rate and overall cost of borrowing.

What happens if my mortgage application is declined?

If an application is declined, the reason should be investigated before you submit another one. The issue may relate to affordability, credit history, the property or a particular lender's criteria. Understanding the reason can help you and your adviser decide what to do next.

What is the difference between a mortgage offer and exchanging contracts?

A mortgage offer confirms the terms on which a lender is prepared to lend, subject to any applicable conditions. Exchanging contracts is a separate legal stage that makes the property purchase binding on the buyer and seller.

Get help with your first-time buyer mortgage

Buying your first home involves several decisions, but you do not have to work through the mortgage process alone.

Premier Mortgage Services has more than 30 years of experience providing mortgage advice. Our advisers can help you understand your borrowing options, compare suitable mortgages and guide you through the application process.

Whether you are just starting to save for a deposit or have already found a property, getting advice early can help you understand what is achievable and what you need to do next.

To discuss your circumstances, contact Premier Mortgage Services for an initial consultation. We provide mortgage advice from our Nottingham offices in Stapleford and the Lace Market, as well as online appointments.

Premier Mortgage Services is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. There may be a fee for arranging your mortgage, depending on your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.

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