First-time buyer mortgages: getting on the property ladder

The minimum deposit required typically starts at 5% of the property's value, but offering a larger deposit can give you access to better interest rates and more mortgage options. For example, on a £200,000 property, you'd need at least £10,000 for a 5% deposit, but increasing this to £20,000 (10%) could reduce your monthly payments significantly. Consider this example: On a £200,000 property with a 25-year term: 5% deposit (£10,000) at 4.5% interest = approximately £1,056 monthly payment 10% deposit (£20,000) at 4.0% interest = approximately £955 monthly payment The larger deposit could save you over £1,200 per year in repayments, demonstrating why it's often worth saving a bit longer if possible.

Beyond your deposit, you'll need to budget for several additional costs as part of your mortgage deal. Survey fees typically range from £250 for a basic survey to £1,000+ for a full structural survey. Legal fees usually cost between £850-£1,500, while your mortgage provider will charge an arrangement fee ranging from £0-£2,000 depending on the lender and product. You'll also need to consider: Stamp duty (though many first-time buyers are exempt up to £425,000) Buildings insurance (typically £200-£400 per year) Estate agents' fees, typically from around 1-3.5% of the purchase price Mortgage and protection advisers' / brokers' fees Moving costs Initial furnishing and decoration Emergency fund for unexpected repairs Mortgage repayments - use our mortgage calculator to work out your monthly mortgage payments and make sure you can afford them

Your credit score plays a crucial role in your mortgage application, affecting both your chances of approval and the interest rates you'll be offered. A higher credit score typically gives you access to better deals and higher borrowing amounts. For example, someone with a good credit score (700+) might be offered rates 0.5-1% lower than someone with a fair score (600-699). To improve your credit score before applying: Register on the electoral roll Pay all bills on time Keep credit utilisation below 30% of available credit Avoid applying for new credit in the 6 months before your mortgage application Check your credit report for errors and correct them Close unused credit accounts Consider that even a 0.5% difference in interest rate on a £200,000 mortgage could mean paying an extra £50-£60 per month, or over £15,000 over a 25-year term. If you do have a less than ideal credit history, you may find that a mortgage broker of specialist lender may be able to widen your options. While a full repayment mortgage is by far the more common deal for first-time buyers, specialist lenders may also offer interest-only mortgages if your circumstances are unusual.