Buying your first home is exciting, but the mortgage process can feel like a maze! Don’t worry, Which? has a guide, with the 12 essential things to know before you even start applying. Here’s a summary –

1. Credit Report Check – Don’t Be a Loan Loser!

Before you even think about applying, check your credit report with Equifax, Experian, and Transunion. It’s free! Make sure all the info is correct, especially your address on the electoral roll. Even small errors can hurt your chances.

2. Deposit – How Much Do You Need to Save?

Most lenders want at least a 5% deposit. So for a £250,000 house, that’s £12,500! If you can stretch to 10%, you’ll get better deals. Our mortgage deposit calculator can help you figure out how much to save!

3. Borrowing Power – How Much Can You Get?

Lenders usually let you borrow up to 4.5 times your combined annual income. So, if you and your partner earn £50,000, you could borrow up to £225,000. But remember, it depends on the lender, your existing debts, and other factors.

4. House Prices – Are They Still High?

Last year, prices were flat, and high mortgage rates are still making it hard to buy. But a slower market means you might have more negotiating power.

5. Mortgage Jargon – Don’t Get Lost in the Words!

Mortgages have lots of confusing terms! But don’t worry, you can find jargon busters online to help you understand the basics. Here are a few key words to know:

• Revert Rate/Standard Variable Rate (SVR): The rate you’ll pay when your fixed period ends.
• APRC: The overall cost of your mortgage, including the interest rate and other fees.
• Guarantor: A person who agrees to cover your payments if you miss them. Most mortgages don’t need a guarantor.
• Arrears: When you fall behind on your payments.

6. Agreement in Principle (AIP) – Get a Confidence Boost!

Before you start looking at properties, get an AIP from a lender or mortgage broker. It’s a quick check to see if you’re likely to be approved for a mortgage. This gives you the confidence to make an offer without worrying about getting rejected.

7. Mortgage Rates – They’re Still High!

Don’t expect the super-cheap deals of a few years ago! Rates are around 5% now, but hopefully, they’ll start to fall later this year.

8. More Than Just Rates – Think About the Extras!

Don’t just focus on the lowest interest rate! Check the fees, cashback offers, and other extras.

• Up-front fees: These are usually around £1,000, but can be higher or lower.
• Cashback: Some mortgages offer cashback of around £500.
• Free legals: Some lenders offer free legal services.

9. Your Bank Isn’t Always Best – Shop Around!

You might think your bank is the easiest option, but there are many other lenders offering better deals. A mortgage broker can help you compare and find the best one.

10. Marathon Mortgages – Borrow for Longer?

“Marathon mortgages” last 35 years or more. This can help you afford the payments, but you’ll pay more interest in the long run.

11. Get Your Documents Ready – It’s Admin Time!

Once you have an offer accepted, you’ll need to submit a formal application. This means gathering lots of documents, including:

• Proof of ID
• Proof of address
• Financial statements (bank accounts, credit cards, loans)
• Proof of employment

12. Get Help – You Don’t Have to Do It Alone!

There’s plenty of free advice available online and you can always talk to a mortgage broker. They can help you find the best deal and guide you through the process.

With a bit of preparation and the right advice, you can find your way through the mortgage maze and get the keys to your dream home!