First-Time Buyer Mortgage Guide: From Deposit to Completion.

1. Work out how much you could afford

Before you start seriously searching for a property, it’s useful to understand roughly how much you may be able to borrow and what your monthly mortgage payments could look like.

Mortgage lenders assess affordability in different ways and may consider factors including:

• Your income
• Regular financial commitments
• Existing borrowing
• Your deposit
• Your credit history
• The mortgage term
• The type of property you’re buying

This is why two lenders can sometimes offer very different borrowing amounts based on exactly the same circumstances.

A mortgage adviser can look at your overall position and help you understand what may be realistically affordable before you start making offers.

2. Get your deposit ready

Most first-time buyers will need a deposit towards the purchase price of their home.

Generally, a larger deposit means you need to borrow a smaller proportion of the property’s value and may give you access to a wider choice of mortgage products.

However, mortgages with smaller deposits are available, and in certain circumstances there are also mortgage options that may allow eligible buyers to purchase without providing a traditional deposit.

If some or all of your deposit is being provided by a family member, make sure you mention this early, as lenders have different requirements for gifted deposits.

3. Get a Mortgage Agreement in Principle

A Mortgage Agreement in Principle — sometimes called an AIP, DIP or Decision in Principle — gives you an indication of how much a lender may be prepared to lend based on some initial information about you.

It isn’t a mortgage offer and doesn’t guarantee that the lender will approve your application.

However, having one can be useful when viewing properties and may help demonstrate to an estate agent that you’ve started looking seriously at your finances.

4. Find your home and make an offer

Once you know your approximate budget, the exciting part begins — finding a property.

When you find somewhere you’d like to buy, you’ll normally make an offer through the estate agent.

Remember that the purchase price isn’t the only cost to think about. Depending on your circumstances, you may also need to budget for things such as:

• Solicitor or conveyancing fees
• Survey or valuation costs
• Mortgage product or arrangement fees
• Moving costs
• Buildings insurance
• Stamp Duty Land Tax, if applicable

Understanding these costs before making an offer can help avoid unexpected surprises later.

5. Choose your mortgage

Once your offer has been accepted, it’s time to decide which mortgage to apply for.

The lowest interest rate isn’t necessarily the cheapest or most suitable mortgage overall.

It’s important to consider the complete product, including:

• Interest rate
• Monthly payment
• Product fees
• Mortgage term
• Early Repayment Charges
• Incentives such as cashback or free valuation
• Flexibility
• The lender’s eligibility and affordability criteria

At Liberty Money, we’ll assess your circumstances and compare suitable mortgage options from the lenders available to us.

6. Submit your mortgage application

Once you’ve chosen a mortgage, the full application can be submitted.

The lender will usually want evidence to support the information provided, which could include:

• Proof of identity
• Proof of address
• Payslips or evidence of income
• Bank statements
• Evidence of your deposit
• Additional documents depending on your circumstances

The exact requirements vary between lenders and applicants.
The lender will also arrange a valuation of the property to make sure it is suitable security for the mortgage.

7. Instruct your solicitor or conveyancer

Your solicitor or conveyancer handles the legal side of buying the property.

They’ll carry out searches, review the contract and title, raise enquiries with the seller’s solicitor and deal with the transfer of funds and ownership.

Your mortgage adviser and solicitor have different jobs, but both play an important part in getting you from offer to completion.

8. Receive your mortgage offer

Once the lender has completed its assessment and is satisfied with the application and property, it can issue your formal mortgage offer.

This confirms the mortgage the lender is prepared to provide and sets out the terms and conditions.

Make sure you understand your mortgage offer and raise any questions before proceeding.

9. Exchange contracts

Once the legal work is complete and everyone is ready to proceed, you can exchange contracts.

At this point the purchase becomes legally binding, and a completion date is normally agreed.

Your solicitor will tell you when buildings insurance needs to be in place. This is often required from exchange of contracts, although the exact requirement can depend on the transaction and lender.

10. Completion — time to collect the keys! 🔑

On completion day, your solicitor transfers the purchase funds to the seller’s solicitor.

Once the funds have been received and completion has taken place, the estate agent can normally release the keys.

And just like that…

you’re a homeowner. 🏡