Mortgages made easier

Getting a mortgage: key tips and advice

The idea of getting a mortgage can seem daunting, particularly as a first-time buyer

But with a bit of time, patience, and expert advice, finding a mortgage that’s right for you is achievable – and it doesn’t have to take over your whole life.

Here are our key tips and advice for getting a mortgage, whether you’re just starting out on your property search or you’re actively looking for a mortgage deal.

Getting a mortgage: the early steps

Maybe you’re just beginning to look at properties, and you don’t plan on applying for a mortgage for a while. Here’s what you can do to get yourself mortgage-ready and make getting a mortgage much easier in the long run:

  1. Work out what deposit you can afford. To get a mortgage, you’ll need to save up a deposit – usually at least 5% of the value of the property you want to buy. A bigger deposit (10% or more) can give you a wider choice of mortgage deals.

So, say you’ve managed to save £15,000. That would give you a 10% deposit on a property worth £150,000. You’d then need a mortgage loan to cover the other £135,000.

Working out the deposit you can afford at the start of your property search can help you focus on finding a property within your budget. Try our mortgage calculator to figure it out.

  1. Check your finances. Lenders will look at your income and expenses to check you can afford the monthly repayments on your mortgage. So, it’s worth taking some time to review your overall financial situation before you apply. 

Make a note of your:

  • Income (salary, self-employed income, investments)
  • Job security
  • Expenses (utility bills, food, entertainment, holidays)
  • Debts (credit cards, car finance, personal finance)

Getting your financial documents together (like your payslips and bank statements) will also help smooth the mortgage application process later on.

  1. Look up your credit score, and see if there’s anything you can do to boost it. The higher your credit score, the wider the range of mortgage deals you’ll have to choose from. You can also make sure all the details in your credit report are correct – this can help reduce the risk of your mortgage application being declined. (Here’s what happens if your application is declined.)

  2. Get a mortgage in principle (MIP). If your finances are in good shape and you want a rough idea of the size of mortgage you’re likely to get, you can apply for a mortgage in principle (MIP).

An MIP is a certificate from a bank, building society, or mortgage broker showing how much you can borrow. You can use it in your property search too, to show estate agents you’re a serious buyer, who can afford to buy.

You can get an MIP online in just 5 minutes, as long as you have a few basic details about your finances to hand (your income, savings, and a rough idea of your monthly expenses).

An MIP isn’t a slamdunk guarantee you’ll get a mortgage. Still, it can give you confidence in what you can borrow, for when you find a property you want to buy.

Getting a mortgage: finding the right mortgage deal

Once you’ve had an offer accepted on a property, it’s time to find a mortgage deal that works for you. There are lots of different types of mortgage out there, and it can be difficult to know which one to apply for.

It’s tempting to go straight to your current bank or building society to see what sort of mortgages they can offer you. Thing is, there are more than 20,000 mortgage deals out there, and deals from your bank won’t necessarily be the cheapest.

Your best bet is to contact a mortgage broker (like Habito), who can search through deals from the 90+ lenders out there to help you find the best deal for you. Sometimes, brokers can even get you cheaper deals from your own bank that your own bank won’t offer you. Unreal. A broker will also support you through the application process.

Just want to get a quick idea of what’s out there? You can try a mortgage comparison table.

Trying to decide on a deal? Key questions to consider:

Do you want a repayment or interest-only mortgage? Most residential mortgages are repayment mortgages. That means your monthly payments cover both the actual mortgage loan, and the interest. With an interest only mortgage, you only pay interest each month – then you have to pay off the whole mortgage in one go at the end of the term. It’s generally more challenging for first-time buyers to get this kind of mortgage, though.

How long do you want your mortgage term to be? Your mortgage term is the total amount of time you’ll spend paying off your mortgage. It’s usually something like 25 or 30 years. Usually, the longer your term, the lower your monthly payments are, but the more interest you pay over the life of your mortgage. A short term will get you mortgage free faster, but the monthly payments are higher.

Do you want a fixed or variable interest rate mortgage? With a fixed rate mortgage, you know the exact interest rate you’ll be paying on your mortgage during your fixed deal period. With a variable rate mortgage, your interest payments can go up and down. A fixed rate mortgage can make it easier to plan your finances, but a variable rate mortgage can be cheaper – it depends what your priorities are.

How long do you want your fixed deal to be? This is the period of time your interest rate is fixed for (for fixed rate mortgages) or discounted for (for variable rate mortgages). Your fixed deal period can last anywhere from 2 years, to the whole term of your mortgage. Longer rates come with slightly higher monthly payments, but also give you certainty and security for longer.

Keep these questions in mind as you explore different mortgage options, and if you’re using a mortgage broker, let them know how you’re feeling. A good broker will always ask you what your preferences are anyway, to make sure you get the kind of mortgage that works for you, now and in the future.

Getting a mortgage: submitting the application

You can only get a mortgage once you’ve found a property. That’s because a mortgage is what’s called a ‘secured’ loan, it’s tied to the house you’re buying. So lenders will want the lowdown on the property they’re lending against before they give you a mortgage for it.

OK – found a property, and chosen a mortgage? That means it’s time for your mortgage application. In simple terms, you send the lender some detailed information about you, your financial circumstances, and the property you want to buy. Then, the lender uses that to decide if they’re happy to lend you a mortgage.

The documents you’ll need to apply for a mortgage

It’s different for every lender of course, but you’ll usually need:

  • ID documents
  • Proof of name and address
  • Proof of income and deposit
  • Information about your spending

Here’s a list of all the documents you’ll likely need. You won’t have to send original documents, high quality scans or photos are fine.

You’ll also need details of which contact a solicitor or conveyancer you’re using to do the legal work you need to buy. That includes the legal transfer of that property from the previous owner to you. At Habito we can help you with the legal work, if you need it.

Once your application is submitted, it typically takes 3–6 weeks for the lender to process it. This includes checking your documents, doing a credit check, and carrying out a “valuation survey” on the property you want to buy (to confirm it’s worth the price you’ve offered for it).

So, what next?

Fingers crossed – you get your mortgage offer!

Your official mortgage offer will be in writing. It will come with a mortgage illustration – a document explaining the key features of that mortgage.

Make sure you read the offer document, the mortgage terms and conditions, and the illustration carefully before you accept the offer. It’s your opportunity to make sure you’re absolutely comfortable with the deal before you commit to it. Don’t rush, and ask for advice if you feel you need it.

Then, if you’re happy with everything, you can sign on the dotted line. Congratulations! You have a mortgage lined up, and you’re one step closer to becoming a home owner.

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Alex Winn

Mortgage Expert | CeMAP, CeSRE

Alex decided to become a mortgage broker after he used one to buy his flat. Was he inspired by the amazing service? No. He just figured he could do a much better job. Today, Alex leads one of Habito's biggest teams of brokers, giving people the expert, savvy advice they need to make buying their homes a breeze.

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