Buying your first home? Here's how the mortgage bit works
Buying your first place is exciting — and a little terrifying. There's a wall of new words and some very big numbers. Let me break the mortgage part down gently, so you walk in knowing what's what.
What a mortgage actually is
A mortgage is simply a loan to buy a property, secured against that property. You put in some of your own money — your deposit — and borrow the rest from a lender. You then pay it back over many years, usually monthly, with interest on top.
Because the loan is secured, the property is the lender's safety net: if the repayments stop, they can ultimately take steps to recover what they're owed. That's the trade-off for borrowing such a large sum.
Most first-time buyers take a repayment mortgage, where each payment chips away at both the interest and the amount you borrowed — so the balance shrinks over time and the home is fully yours at the end.
Your deposit, and why LTV matters
Your deposit is the chunk of the price you pay yourself. As a rough rule of thumb, the more you can put down, the less you borrow — and the more choice of deals you tend to have.
Loan-to-value (LTV) is the bit of jargon that ties it together. It's the size of your loan compared with the property's value. Borrow most of the price and your LTV is high; put down a larger deposit and your LTV is lower.
Lenders often reserve their sharpest deals for lower LTVs, so a bigger deposit can open up more options. But saving for longer has trade-offs too, and everyone's situation is different — there's no single right answer here, just what works for you.
What lenders look at
Before lending, a lender wants to feel confident you can comfortably manage the repayments. Broadly, they look at:
- Affordability — your income set against your regular outgoings and existing commitments.
- Your credit history — how you've handled borrowing before, from cards to phone contracts.
- Deposit and LTV — how much you're putting in versus how much you're borrowing.
- Job and income type — employed, self-employed, on contract, and so on.
Every lender weighs these slightly differently, which is why one might say no where another says yes. There's no universal pass mark, and nothing here is a promise about what you'd be offered.
The journey, and a decision in principle
A helpful early step is a decision in principle (sometimes called an agreement in principle, or DIP). It's a lender's initial indication of what they might be willing to lend, based on a quick look at your details. It isn't a formal offer or a guarantee, but it can show estate agents you're a serious buyer.
From there, the rough shape is: find a property, make an offer, apply formally, have the property valued, and — if all goes well — receive a mortgage offer, then complete. The whole thing can take weeks or months, and timings vary a lot from one case to the next.
Help for first-time buyers
There are various routes designed to give first-time buyers a leg-up. Depending on where you live and your circumstances, these can include government-backed schemes, shared ownership (buying a share of a home and paying rent on the rest), and family or guarantor arrangements.
The catch is that availability, eligibility and the fine print change over time and vary by scheme — so it's worth checking what genuinely applies to you rather than assuming. I can't tell you which route fits, but a qualified adviser can walk through the current options with your actual situation in front of them.
An adviser or going direct?
You can approach a bank directly, or use a mortgage adviser (broker). Both are perfectly valid, and it helps to know the trade-offs.
A whole-of-market adviser can compare deals across many lenders, handle much of the paperwork, and explain why certain products might or might not suit different circumstances. Going direct has its place too — some lenders keep certain deals for their direct customers that a broker can't access.
On cost: many advisers are paid by the lender rather than by you, though some also charge a client fee. A good one will tell you clearly, up front, before you commit to anything.
The honest bit
I can explain how mortgages work and what all the words mean — but I'm a money guide, not an adviser. When you're ready for actual advice, a qualified human looks at your situation and searches the whole market. They're usually paid by the lender rather than by you, there's no fee from me, and there's no obligation to go ahead.
Common questions
How big a deposit do I need as a first-time buyer?
There's no one-size-fits-all figure, and I won't pretend otherwise. Generally, a bigger deposit means you borrow less and tend to have more deals to choose from — but the right amount depends on the property, the lender and your own circumstances. A qualified adviser can look at your situation and explain what's realistic for you.
What is a decision in principle?
It's a lender's early, informal indication of roughly what they might lend you, based on a quick look at your details. It isn't a formal offer and it isn't a guarantee, but it can reassure estate agents that you're a serious buyer when you start viewing properties.
Does using a mortgage adviser cost me anything?
It varies. Many advisers are paid by the lender rather than by you, so there's often no fee to you directly — but some also charge a client fee, which they should disclose clearly and up front. My introduction itself is free, and there's no obligation to go ahead.
Will I definitely be approved?
I can't promise that, and it's worth being wary of anyone who does. Approval depends on your circumstances and on each lender's own rules, which differ from one to the next. The honest answer is that a qualified adviser can assess your situation and give you a realistic picture — no guarantees, just a proper look.
Want to talk it through with a real person?
When you're ready, I can introduce you to a qualified, whole-of-market mortgage adviser who'll look at your situation properly. The introduction is free, the adviser is usually paid by the lender rather than by you, and there's no obligation to go ahead — it's entirely your call.
Find my best deal →Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured against it. This guide is general information, not advice.