First-time buyer mortgages in Northampton: a step-by-step guide

Start with your deposit

Your deposit is the part of the purchase price you pay yourself. The mortgage covers the rest. As general market information, most lenders ask for at least 5% of the purchase price, and a larger deposit can open up a wider choice of mortgages. What is realistic for you depends on your income, your outgoings and the property.

Deposits usually come from one or more of these sources:

• Your own savings. Lenders will want to see where the money came from, so keep your bank statements tidy in the months before you apply.
• A gifted deposit from family. Many lenders accept a gift from a close family member. They usually ask the person giving it to sign a letter confirming it is a gift, not a loan, and that they will have no claim on the property.
• A Lifetime ISA. If you have been saving into a Lifetime ISA, you may be able to put it towards your first home. There are rules on how and when the money can be used, so check the current conditions with your ISA provider well before you plan to buy.

If your deposit is coming from more than one place, tell your adviser early. Lenders need to trace every source, and it is easier to gather the paperwork before you apply than halfway through.

What lenders look at

Each lender has its own criteria, but most look at the same broad areas.

• Income. Lenders check what you earn and how steady it is, using payslips, or accounts and tax documents if you are self-employed.
• Outgoings. Regular spending, loans, credit cards and childcare all affect how much a lender thinks you can afford each month.
• Credit history. Lenders check your credit file for missed payments, defaults and how you manage existing credit. It is worth checking your own file before you apply so there are no surprises.
• The property. The lender will value the home to make sure it is suitable security for the loan.
• Identity and address. Expect to provide photo ID and proof of address.

How much you can borrow is not fixed. Two lenders can look at the same person and reach different figures, which is one reason advice can help.

The steps, from agreement in principle to completion

Every purchase is different, but most follow a similar order.

1. Initial conversation. A short call to understand what you want to buy, your deposit, your income and your timing.
2. Agreement in principle. A statement from a lender that it may lend you a certain amount, based on the information given so far. It is not a mortgage offer, but estate agents often ask to see one before they put your offer forward.
3. Offer accepted. Once the seller accepts your offer, you instruct a solicitor or conveyancer to handle the legal work.
4. Full mortgage application. Your adviser submits the application with your documents. The lender checks the details and arranges a valuation of the property.
5. Mortgage offer. If the lender is satisfied, it issues a formal mortgage offer. Your solicitor carries on with searches and contracts at the same time.
6. Exchange of contracts. The purchase becomes legally binding and a completion date is agreed.
7. Completion. The lender releases the money to your solicitor, the seller is paid and you collect your keys.

Timescales depend on the lender, the property and the chain of buyers and sellers.

Costs to plan for beyond the deposit

Your deposit is not the only cost. Budget for solicitor or conveyancing fees, surveys, any lender fees, Stamp Duty Land Tax if it applies to your purchase, and the cost of moving itself. There may also be a fee for mortgage advice, which is discussed and agreed with you before any chargeable work begins.

Protecting your new home

A mortgage is a long-term commitment. Many first-time buyers look at life insurance and income protection when they buy, so the mortgage could still be paid if something happened to them. Our guide to life insurance and income protection explains the main types of cover.

How a mortgage adviser helps

GK Finance is based in Northampton and works with clients across the UK by phone and video. Your adviser is CeMAP-qualified, with more than fifteen years of UK industry experience. As an appointed representative of HL Partnership, we have access to more than 90 lenders and providers.

In practice, an adviser can help you:

• work out a realistic budget before you start viewing
• find lenders whose criteria fit your income, deposit and credit history
• prepare your documents so the application is as complete as possible
• manage the application and keep in touch with the lender, the estate agent and your solicitor

Nothing in this guide is a promise that a lender will offer you a mortgage. Each lender assesses every application against its own criteria. You can read more about our first-time buyer mortgage advice.