Opinion and guidance

3 mortgage tips for first- time buyers

Securing a mortgage is, for most, the first step on your home ownership journey. Yet taking that leap can be nerve wracking as you enter a whole new world of jargon and decisions.

Whether you’re ready to buy your first home or planning ahead, here are 3 simple tips to securing your first mortgage as a first-time buyer.

Family of 4 relaxing at home

1 Check your credit report and credit score

We know what you’re thinking, and the answer is: yes, they are 2 different things.  

Your credit report provides a history of your borrowing experience to help lenders make decisions about your application for credit.

A credit report will include how much debt you have, a record of how and when you pay bills, details of missed payments, and how long you’ve had credit accounts.

A credit report is used to determine your credit score.

A credit score is a 3-digit a number that represents your credit risk. The higher the score the better.

Getting into the habit of keeping tabs on your credit report and score will enable you to spot and correct errors. You’ll also have access to insight that could help you improve your score, for example by joining the electoral register.

Credit reports and scores are created by credit reference agencies. The 3 most common are Experian, Equifax and TransUnion.

You can access your credit report and score online for free. Just run a search in your browser.

2 Find out how much you can borrow

Thankfully there’s a relatively quick way to work out how much you could borrow to buy your first home: a Mortgage Agreement in Principle (AiP).

Don’t let whispers that it’s increasingly tricky to afford a mortgage deter you.

One of the best initial steps first time buyers can take is to carry out an Agreement in Principal to get an accurate estimate of how much you could borrow. 

But what is an AiP?

Fundamentally it’s an estimate of how big a mortgage a lender would give you based on information submitted about your circumstances.

Completing an AiP doesn’t usually affect your credit score, unlike a mortgage application which requires a full credit check.

Having an Agreement in Principle will also enable you to reserve that dream new build home you’ve got your eyes on. Result!

Another quick thing: getting an AiP from a lender doesn’t mean you are committed to a mortgage with them.

You can complete an AiP on most lenders’ websites, in branch or via a mortgage broker.

3 Create and stick to a budget

… and make your budget realistic. Your bank statements are likely to be reviewed by a lender as part of a mortgage application to determine whether you’d be a reliable borrower.

Combing through your finances will help you create a realistic, mortgage-friendly budget.

Committing to a realistic budget will reduce the chances of you exceeding your income, therefore reducing your reliance on an overdraft and avoiding returned or failed payments, like direct debits.

More advice on buying your first home?

For more tips and information on the mortgage process, download ‘A first time buyer’s guide to new builds’ now.

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