A mortgage is a type of loan you can use to buy or refinance a home. You’ll usually need to put down a deposit for at least 5% of the property value, and a mortgage allows you to borrow the rest from a lender.

First time buyers

Do I need a mortgage?

Most people buy a home with a mortgage. It is a necessity if you cannot pay the full cost of a home out of your pocket.

Who is eligible?

Taking out a mortgage involves borrowing a large amount of money. That is why lenders are not able to provide a mortgage to everyone.  To qualify for the loan, you must meet certain criteria requirements in order to be eligible for a mortgage.

You need:

• a stable and reliable income
• a debt to income ratio of less than 50%
• a good credit score
• to be 18 or older

Other factors include:

• length of time in your current job
• current debts
• whether you are self-employed
• the size of your deposit

Do I need a financial advisor or should I do it myself?

A mortgage advisor is a qualified professional who specialises in finding the most suitable mortgage deal for your circumstances.  It can be a great help. It may also lead to a significantly better value deal, potentially saving you thousands of pounds over the mortgage term. If you are a first-time buyer, then you have the most to gain from a mortgage advisor.

How much deposit do I need?

In most cases, you need to try to save at least 5% to 20% of the cost of the home you would like to purchase.

How much can I borrow?

On average, with most lenders you will be able to borrow up to four and a half times your total earnings, but if you decide to buy a home with someone else, such as your partner, you can often borrow up to three and a half times your total income. The maximum amount of mortgage you can usually borrow is 95% of the value of the property, so you will need at least a 5% deposit.

Help to buy

Help to Buy is a government scheme which is designed to help First Time Buyers. It aims to help people who are finding it difficult to save for a house deposit and assist your first step on to the property ladder.

An equity loan

How does it work?

With a Help to Buy the government lends you up to 20% (40% if you live in London) of the cost of your newly built home. You pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest. You will not be charged interest on the 20% loan for the first five years of owning your home.

Who is Eligible?

The scheme is designed to help first time buyers. The main condition is that the property you are purchasing must be a New Build and the maximum price of the new build property is £600,000. Another condition is that you will not be able to sublet your home or enter a part-exchange deal.

Shared ownership

How does it work?

Shared Ownership allows buyers to purchase a share of a home – usually between 25% and 75%. Purchasers will pay a mortgage on the share that they own, and a below-market-value rent on the remainder to a housing association, along with any service charge and ground rent. As the purchaser only needs a mortgage for the share they own, the amount of money required for a deposit is often much lower compared to purchasing a property outright. Shared Ownership is an alternative home ownership scheme which gives first time buyers, and those that do not currently own a home, the opportunity to purchase a share in a new build or resales property.

Who is eligible?

You could buy a home through Shared Ownership in England if: your household earns less than £80,000 a year (or £90,000 inside London), if you are a first-time buyer, if you used to own a home but can’t afford to buy one now or if are an existing shared owner looking to move.

The main eligibility criteria for Shared Ownership is as follows:

• You must be at least 18 years old.
• You cannot own another home.
• You are not able to afford to buy a home suitable for your housing needs on the open market.
• You must show you are not in mortgage or rent arrears.
• You must  have a good credit history.