Mortgages & Finance

A Property Deposit.

You’ll usually need to build up a deposit of at least 5% of the price of the property you want to buy. However, it’s often worth saving more if you can bear to wait longer, as a bigger deposit means access to mortgage deals with lower interest rates. If you're a first-time buyer hoping to buy a property costing up to £450,000, saving into a lifetime Isa will entitle you to a 25% top-up from the government. If you’re keen to buy sooner rather than later, you could consider the following options: Help to Buy equity loan - you save a 5% deposit and the government loans you between 15% and 40% of the property price, depending on where you want to buy, for a new-build home. Shared ownership - you buy a 25%-75% share in a property and pay rent on the rest. Help from parents - even if your family can’t provide cash towards your deposit, some mortgage lenders will take parents’ incomes or assets into account, making it easier for you to borrow.
 

Mortgage Application - what you need to do - the process.

The amount a mortgage provider will lend you will depend on the size of your deposit, your income and your credit score. If you’re buying a property with other people, the lender will also take their finances into account. Remember to budget for the additional costs of buying a property, including conveyancing, surveys and - depending on the cost of the property and whether you’re a first-time buyer - stamp duty.

Apply for a mortgage agreement in principle.

Also known as a decision in principle (DIP) or agreement in principle (AIP), this is a confirmation from a mortgage lender that they would, in principle, be willing to lend you a certain amount. Having an AIP can make you a more attractive buyer as it shows the seller and their estate agent that you will be able to secure the amount of money you need to buy the property. Applying for a mortgage in principle can involve either a soft or hard credit check. A soft credit check won’t affect your credit rating, but multiple hard credit checks within a short period of time can impact your credit score, which can in turn reduce your chances of being accepted for a mortgage. It’s therefore important to seek advice before applying for an AIP.