The hardest part of a first mortgage is not the rate. It is knowing which numbers the lender is actually looking at.
The hardest part of a first mortgage is not the rate. It is understanding which numbers the lender is actually looking at, because those numbers decide both whether you are approved and what you are offered.
Loan-to-value is the share of the property the lender is funding. Buy a £250,000 home with a £25,000 deposit and you are borrowing £225,000 — a 90% LTV.
Lenders price in bands, not on a smooth curve. This is the single most useful thing to understand about deposits.
Going from a 9% deposit to a 10% deposit crosses a threshold and can move you to a materially cheaper set of products. Going from 10% to 14% may do very little, because you have not reached the next band. If you are close to a boundary, finding the extra to cross it is usually worth more than the amount itself.
Most lenders work to roughly 4 to 4.5 times income, with some stretching to 5 or more for higher earners or specific professions. On a joint application it is normally applied to combined income.
That multiple is a ceiling, not a promise. Affordability is assessed on what is left after your commitments: credit cards, car finance, loans, childcare, and a stress test checking you could still pay if rates rose.
Clearing a car finance agreement before applying can increase your borrowing capacity by considerably more than the balance you cleared.
A fixed rate holds your interest rate for a set term — usually two or five years. Your payment is certain, and you pay a premium for that certainty. Leaving early normally triggers an early repayment charge.
A tracker follows the Bank of England base rate plus a margin. Payments fall when the base rate falls and rise when it rises.
For a first purchase, where the budget is usually tightest and a payment shock is hardest to absorb, most first-time buyers choose a fix. The two-versus-five-year question is really about how confident you are that you will stay put — a five-year fix bought cheaply is excellent value until you need to move in year three.
The deposit is the big number, but it is not the only one.
Stamp duty. First-time buyer relief applies from £300,000 on properties worth up to £500,000. Above £500,000 the relief is lost entirely, which makes that threshold worth negotiating around.
Legal fees. Typically £1,000 to £2,000 including searches.
Survey. From a few hundred pounds for a basic homebuyer report to over £1,000 for a full structural survey. On an older property this is not the place to economise.
Mortgage product fee. Often £999 or more, and sometimes addable to the loan — where it then accrues interest for the whole term.
Moving and immediate repairs. The costs that consistently get underestimated.
A realistic rule is to budget 2% to 3% of the purchase price for everything that is not the deposit.
If you are under 40, a Lifetime ISA pays a 25% government bonus on up to £4,000 a year — £1,000 free annually — and the money can go towards a first home worth up to £450,000.
Two conditions catch people out. The account must have been open for at least 12 months before you can use it for a purchase, and the £450,000 cap is a hard ceiling: buy for a pound more and you face a withdrawal charge that can leave you with less than you paid in.
If a first purchase is more than a year away and you are under 40, opening one with a small amount purely to start the clock is a sensible piece of housekeeping.
An agreement in principle is a lender's indication of what they would lend, based on a soft search. Estate agents often want to see one before taking an offer seriously. It is not binding on either side.
The full application is where the hard search, the documents and the valuation happen. Expect to provide three months of payslips and bank statements, proof of deposit and its source, and ID.
Lenders read those bank statements. Regular gambling transactions, unexplained large deposits or a pattern of exceeding your overdraft in the three months before applying are all genuinely worth avoiding.
To keep the deposit target honest, the savings goal and sinking funds tracker turns a completion date into a required monthly amount.
Check your credit file with all three agencies and fix anything wrong — our guide to UK credit scores covers what actually matters. Keep your deposit somewhere stable and traceable. Avoid new credit in the run-up. And compare what lenders are offering at your LTV band in the mortgage comparison.