Whether you can get a mortgage depends on a few things:
How much money you want to borrow
The size of your deposit
Your employment status and income
Your monthly spending commitments (your outgoings)
Your age and where you are in life
If you have people who depend on you financially
The type of property you want to buy
Any debts you have and your borrowing history
As a starting point, it’s a good idea to work out roughly how much you can afford to borrow. This will then help you find properties within your budget, and will give you an idea of your monthly mortgage repayments.
Before agreeing to give you a mortgage, lenders need to know you can afford the repayments without struggling. They want to see if you’re responsible when it comes to paying debts, how much you can afford, and whether you fit their other lending criteria.
As part of their affordability checks, mortgage lenders will look at the following things:
They’ll usually ask for a recent P60 and at least three months of recent payslips. If you’re self-employed, you’ll need to prove your income by submitting accounts or other evidence. Some lenders will also consider other income such as bonuses and government benefits when working out how much to give you.
Your spending habits will be looked at closely to see if you’re responsible with your money. Any balances on credit cards will be weighed up against your income (called a debt-to-income ratio) and your regular outgoings such as bills, childcare costs, and loan payments will all be factored into the lender’s calculations. You’ll usually have to provide up to three months’ worth of bank statements as part of your application, so try to stick to good habits in the lead up to the mortgage process.
Changes to your situation
Mortgage lenders carry out something called ‘stress testing’ where they work out if you’d still be able to pay your mortgage if something unexpected happens. Situations such as illness, rising interest rates, job loss, or having a baby are possible scenarios, and lenders will want to be confident that you won’t struggle. If you’re applying with another person, lenders will take both your finances into account.
Mortgage regulation has changed for the better since the 2008 housing crash, which means rules are a lot tighter. Lenders will need you to provide proof of identity and evidence of your financial situation. They ask for this to comply with mortgage affordability rules and money laundering laws.
Documents you need to provide include:
Proof of identity
A passport or driving licence
A recent council tax bill
Utility bills dated within the last three months (it can’t be a mobile phone bill)
Proof of income if you’re employed
Payslips or accounts if self-employed
A recent P60
Evidence of any bonuses or commission (paid or upcoming)
At least three months’ worth of banks statements (from the account your salary gets paid into)
Proof of income if you’re self-employed
Two or more years of certified accounts (depending on the lender)
Evidence from HMRC of your earnings in SA302 tax calculation and a tax year overview.
if you’re a contractor, you’ll have to show proof of upcoming contracts
if you’re a company director, you’ll have to provide evidence of dividend payments or retained profits.
The deposit is often the biggest barrier for people trying to get on the property ladder.
When you take out a mortgage, you’ll need to put some money down upfront – known as a deposit. This cash lump sum goes towards the cost of the property you want to buy. The bigger your deposit, the less you'll need to borrow and the lower your monthly repayments will be.
What deposit you'll need to put down depends on how much the property is worth. A lender will then factor in your deposit when deciding how much you can afford to borrow. Generally, between 5-10% of the property value is the minimum deposit that a lender will accept.
However, if you’re using a government help scheme to get on the property ladder, the rules will be slightly different.
Read more in our Guide: How Much Deposit Do I Need to Buy a House in the UK?
Mortgages without a deposit - referred to as 100% mortgages - are not common at all. Some specialist lenders may occasionally offer them. But at the moment, there are no 100% mortgages on the market.
You’d probably need to have a perfect credit history to be considered if they ever do come back on the market. And they’re likely to only come onto the market in times of very strong national financial stability.
If you don’t have a deposit and need a mortgage, you could consider the following options:
A guarantor mortgage is where someone else agrees to pay for your mortgage if you can’t. They're a popular option for people with bad credit, low income, or a small deposit.
Having a guarantor means that you’re more likely to be accepted for a mortgage than if you were applying alone with bad credit. You could even borrow more than you would on your own, or unlock the lower interest rates.
A specialist mortgage lender will look at your individual circumstances when assessing your application. Lenders will want to know what caused your bad credit, how long ago it was, and how much money was involved. If you've been working to improve your credit since your credit issues happened then lenders will look more favourably on your application.
A mortgage lender will need to secure your mortgage against your guarantor’s home or their savings. This means they can repossess your guarantor’s home if your mortgage doesn’t get paid. Because of this risk, it’s a good idea to get advice from a mortgage broker before applying for a guarantor mortgage.
Read more in our Guide: Guarantor Mortgages Explained.
Joint Borrower Sole Proprietor mortgage (JBSP)
A Joint Borrower Sole Proprietor mortgage (JBSP) is a mortgage that you take out with your parents or family member. You’re all responsible for paying the mortgage, but you’ll be the sole owner of the property.
Mainly designed for younger people, JBSP mortgages are a good option if you haven’t built up a credit history, or have a bad credit score. You can work on building your score once your mortgage is approved, and you’ll be in an easier position when it comes to remortgaging if you’ve kept up with your repayments.
You might also consider a JBSP if you’re just starting out in your career/have a low income currently, but expect your earnings to increase. It’s also good if you have your eye on a bigger home or a property in a better location.
JBSPs are bespoke mortgages that require carefully crafted applications, and only certain lenders offer them. If you’re thinking of taking out a JBSP, it’s best to speak to an expert mortgage broker. That’s where we come in! Make an enquiry to speak to one of our Mortgage Experts – it only takes 60 seconds and won’t affect your credit score.
Read more in our Guide: What is a JBSP Mortgage?
How much you’ll pay each month will depend on the following things:
How much money you borrowed – the bigger your loan, the higher your repayments
Your mortgage interest rate – the higher your rate, the higher your repayments
Any fees added to your mortgage – any fees will increase your repayments
The length of your mortgage term – the longer your term, the lower your repayments
It used to be that mortgages were all 25 years long. But things are more flexible these days, and you can change the length of the term to suit you.
To get an idea of what your repayments will look like, use our Mortgage Payment Calculator.
The deposit is usually the biggest hurdle people face when looking to become homeowners. A lot of people simply can’t save enough money for a deposit alongside their rent and bills. Fortunately, there’s a few schemes to help people get on the property ladder.
Help to Buy is a government scheme for first time buyers. It enables you to get on the property ladder with a 5% deposit. The government gives you an equity loan to put towards the cost of a new-build home.
The loan ranges from 5-20% of the property value (40% in London), and you'll need to purchase your home from a registered Help to Buy homebuilder. The current scheme runs until March 2023 and is available to first time buyers in England only.
Interest on your equity loan will start after five years, and you can repay some or all of your equity loan at any time. The amount of equity loan you pay back will be worked out as a percentage of what your home is worth at the time. If the price of your home has gone up, then so will the loan amount you’ll need to pay. If the value has fallen, the amount you’ll pay on the loan will too. Read more about Help to Buy.
The 5% deposit scheme (also known as the Mortgage Guarantee Scheme) does what it says on the tin: it’s a scheme where you can get a mortgage with just 5% deposit. The 5% mortgage scheme is a new government-backed scheme, allowing first time buyers, home movers and previous homeowners to get a 95% loan-to-value (LTV) mortgage.
The 95% mortgages will work just the same as any other mortgage - the experience won’t be any different for you as a buyer. The difference happens on the lender’s side. The scheme guarantees that the government will take on some of the cost if the lender loses money after giving you a mortgage. E.g. if you were repossessed or your home decreased in value. The scheme is due to run until December 2022. Read more about the 5% deposit scheme.
Right to Buy gives you the opportunity to buy your council home at a big discount. It’s only available in England and Northern Ireland (the discount is a lot lower in NI).
Your Right to Buy discount depends on where you live and whether you’re in a house or flat. The maximum discount you can get is £84,200 or £112,300 if you live in London. This is regardless of how long you’ve lived in your home, or how much it’s worth.
If you live in a house, you get a 35% discount if you've been a tenant for between three and five years. After five years, the discount goes up by 1% for every extra year you've been a tenant.
If you live in a flat, you get a 50% discount if you’ve been a tenant for between three and five years. After five years, the discount goes up by 2% for every extra year you’ve been a tenant.
In both cases, the maximum discount you can get is 70% – or £84,200 across England and £112,300 in London (whichever is lower). For example, if you’ve been a tenant for 10 years, you could buy your flat worth £100,000 for just £40,000 – using a 60% discount. Read more about Right to Buy.
Yes, you can still get a mortgage as a first time buyer, even if you have bad credit! But it can be more difficult compared to someone who has a better credit rating. You’re generally seen as a bigger risk, and the more mainstream lenders (such as the high street banks) will turn you down flat if you have an adverse credit history.
When it comes to credit issues, it’s best to face them head on. The first step towards that is to get an accurate, up-to-date and thorough look at your credit history and credit score. Read how to find out your credit score and get your file as good as possible for your first time buyer mortgage application.
Even if you’ve been refused a mortgage by your bank or a high street lender, there’s specialist lenders who’ll consider you. But you'll need a mortgage broker (like us!) to get access to these lenders. Our Mortgage Experts will take the time to understand your situation and look at your options. Make an enquiry to get started.
It’ll be a condition of your mortgage contract that you take out buildings insurance. The lender wants your home to be protected so they don’t lose money if something happens to the property.
Other insurances such as life insurance and critical illness cover aren't mandatory, but it's definitely something to think about. Your most important asset is you, so it's makes sense to get protected. Life can throw us curveballs, and these insurances make sure that - should the worst happen – your mortgage is paid and you can keep your home.
When getting your mortgage through us, you'll have a dedicated Insurance Specialist as part of your mortgage team. They'll have a look at your situation and give you no-nonsense advice on the cover you need. Setting up your insurance with us doesn't cost you a penny. We get paid directly by insurers, so it's in our interest to get you the right deal.
Make an enquiry to discuss your options.
Brokers hold your hand throughout the mortgage process, but they can’t do the legal paperwork. Property purchases are big and complex transactions, which is why they need to be handled by dedicated legal professionals. See how solicitors fit into the house buying process below.
Mortgages can be really confusing. Let’s try to simplify it.
When it comes to paying back your mortgage, there’s two ways you can do it: ‘repayment’ or ‘interest-only’. Most mortgages on the market are repayment, but some interest-only mortgages have started to make a comeback.
Most homeowners have a repayment mortgage. Essentially, each monthly repayment will chip away at both your mortgage and the interest on it. At the end of your mortgage term, you’ll have paid off the total cost of everything – the original amount you borrowed plus the interest.
When you first start making your repayments, the bulk of the money will go towards paying off the interest. But this isn’t a reason to be concerned. The interest on mortgages is known as ‘front-loaded’, which means you're paying more interest at the start. Simply put, your interest is calculated on how much money you have left to pay back, so the interest will remain high until you start chipping away at your outstanding balance. The more you pay off, the less interest you'll be paying.
It’s as it says. With an interest-only mortgage, you’re only paying off the interest on your loan each month, rather than paying back the money you’ve borrowed. So at the end of your mortgage term, you’ll still have the entire loan to pay back.
The reason people opt interest-only is because the monthly repayments are a lot lower. It’s not a hugely common option for homeowners because it’s only cost-effective in the short term - you’ll still have to pay off the lump sum at the end of your mortgage term. Most people who opt for interest-only mortgages have chosen this for their buy-to-let properties.
Along with choosing how you pay back your mortgage, you’ll also need to consider the interest type on your mortgage. There’s a few different ones, and they can all affect your mortgage differently.
Fixed rate mortgages are very popular in the UK. Fixed Rate means the amount of interest you’ll pay won’t change for a fixed amount of time. Typically, this is between two and five years. When your fixed rate deal ends, your interest rate will switch to your mortgage lender’s ‘standard variable rate’ (SVR).
If you want a longer fixed rate deal, you’ll normally have to pay a higher level of interest. When your deal is up, it’s a good idea to remortgage to get a better deal.
😀 Fixed rate pros:
You know exactly what your repayments will be every month.
Your mortgage interest will stay the same, even if rates increase.
🤔 Fixed rate cons:
If interest rates drop, you won’t benefit from the lower rate.
If you want to repay your mortgage early, you’ll usually have to pay a penalty fee.
Standard Variable Rate (SVR)
SVR mortgage rates follow the Bank of England’s base interest rate as it goes up or down. Interest rates are affected by changes to the UK economy. If interest rates go down, you’ll pay less interest on your mortgage. If it goes up, you’ll pay more.
😀 SVR pros:
You don’t have to stick with this rate, it’s usually for when a different deal comes to an end.
You usually won’t pay a penalty if you pay off your mortgage early.
🤔 SVR cons:
If interest rates shoot up, your repayments could become very expensive.
If your repayments become more than you can afford, your home could be at risk.
Similar to the SVR, this type of mortgage interest follows trends from the Bank of England. Your interest rate will be set either under or over the base rate. Tracker mortgages follow (track) this external interest rate.
😀 Tracker pros:
Your repayments will go down if interest rates drop.
You could get a good introductory deal, as trackers are riskier than other mortgages.
🤔 Tracker cons:
Your repayments will increase if interest rates go up, making budgeting more difficult.
Some tracker mortgages set certain lower limits (known as collar rates) meaning you won’t benefit from really low payments if rates drop below this limit.
A type of variable rate, Discount Rate mortgages have a fixed interest rate set lower than your lender’s SRV for a period of time. Essentially a ‘discounted’ rate.
😀 Discount Rate pros:
You can grab a low interest rate at the right time.
Your arrangement fee may be lower.
🤔 Discount Rate cons:
Your rate could change at any time, making budgeting more difficult.
Just because the Bank of England changes their base rate, doesn’t mean your lender will change theirs. You might also have a cap on how low your repayments can go.
Capped rate mortgages are a form of Variable Rate mortgage. However, they have an upper limit - or cap - for how much the interest rate can increase. They’re fairly rare these days.
😀 Capped Rate pros:
Peace of mind; you know your payments can’t go above a certain level
You can benefit from the lower interest rates
🤔 Capped Rate cons:
Despite your cap, interest rates could still go up, making monthly budgeting harder.
Capped Rate mortgages are rare, so you may struggle to find one.
Offset mortgages help you to pay off your mortgage faster. This can be through cutting down your monthly payments or shortening your mortgage term. Offset mortgages can be either fixed rate or variable, but the difference is your savings are used to ‘offset’ some of the interest paid on your mortgage.
😀 Offset pros:
You can get more interest on your savings than you would in a normal savings account.
It’s a popular option for parents getting their children onto the property ladder.
🤔 Offset cons:
You’ll probably have to pay a higher interest rate compared to other mortgages.
If you don’t have a lot of savings, you may not see the benefits.
Knowing what mortgage to go for can be confusing, so it’s a good idea to work with a specialist mortgage broker (like us!) who can look at your unique situation and find the best mortgage for you. Make an enquiry to speak to one of our Mortgage Experts.
Before looking at properties, it’s a good idea to get a Decision in Principle (DIP). A DIP is a confirmation from a lender that they’re willing to lend you a certain amount of money to purchase a property. A mortgage broker can usually get this for you within a few hours, and a lot of estate agents won’t book a viewing unless you have one. Once you’ve got this, you’ll have a better idea of your budget and what your monthly repayments will look like.
Once you know your budget, you can start the fun bit – viewings! It’s important to weigh up the pros and cons of each property you see and decide if it’s right for you. It’s unlikely you’ll fall in love with the first place you see, so take your time. Once you’ve found the dream abode, it’s time to make an offer. The estate agent will act as the middleman between you and the seller, and will let you know if you’ve been successful.
When your offer is accepted on a property, it’s time to get the mortgage! A mortgage broker can take you through the entire process and help you put forward the best case as a borrower. As part of their decision-making process, the mortgage lender will need to send someone to check if the property is worth what you’re paying for it – known as a valuation. At this stage, you can also get your own survey done to make sure there’s nothing structurally wrong with the property.
You can get a solicitor at any point after a mortgage offer, but you’ll always need one to carry out the transaction on your behalf. A solicitor carries out searches on the property to find out things like planned developments in the area, local authority searches and other research to make sure everything’s peachy before you buy.
Once the lender is happy with the valuation and you’ve passed all their checks, they’ll send you a formal mortgage offer which will go to you/your broker and your solicitor. Sorted!
If all the solicitor’s searches come back ok, then both your solicitor and the seller’s solicitor will draw up some contracts ready for you to sign, known as ‘exchanging contracts’. You can then set a completion date (the date you officially become the property owner) once you’ve exchanged - you can even do them on the same day. Remember, once you’ve exchanged contracts, you won’t be able to back out from the purchase without losing your deposit, so it’s important to make sure you’re 100% happy!
It’s time to book the moving van and box up your things. Your completion date is the day you officially own the property and become a homeowner 🎉 The whole mortgage process from start to finish can be anywhere from around 6-8 weeks, but can sometimes take a lot longer. It all depends on how complex your situation is, and if there’s any hold-ups on the seller’s end.
The best thing you can do to take the stress out of the process is to work with a mortgage broker (like us!). They won’t waste time going to lenders that won’t accept you – they’ll find you the right deal and work as your champion to keep things moving. Make an enquiry to speak to one of our friendly Mortgage Experts.
As a first time buyer, you’ll most likely have chosen a fixed-rate mortgage. Fixed-rate deals usually come to an end between two to five years after taking out your mortgage. When you’re approaching the end of your deal, it’s a good idea to shop around for a better mortgage – known as remortgaging.
Remortgaging can be a great way to release some extra cash for home improvements, make a big purchase, or just lower your monthly repayments.
You don’t have to remortgage with your current lender either. Working with a mortgage broker (like us) gives you a better chance of finding the right mortgage.
You can read more about remortgaging in our Complete Remortgaging Guide.
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.