First Time Buyer 101

For sale signBuying a home for the first time can be a daunting experience, especially if you don't know where to start.

Here is a list of steps to help you get onto the property ladder. For more information on buying your first home, visit our independent First Time Buyers' Guide or watch our YouTube video to help you understand the mortgage process.

1. Work out how much you can afford
You may have set your heart on buying your own home, but you don't know if you can actually afford it. Before you start looking at properties, it's important to understand how much you are able to borrow and whether you can meet the monthly payments. Start by putting together a budget by using the budget sheet within our First Time Buyers' Guide.

Don't forget to consider other costs associated with moving into your new home, such as home insurance, council tax, utility bills, legal fees, survey fees, mortgage arrangement fees, moving costs and costs for furnishing the property.

2. Decide the amount of deposit you can afford
Most lenders will ask first time buyers to put down at least a 10% deposit e.g. £10,000 on a £100,000 property. But it's worth checking what offers are available for first time buyers like you. For example, Nationwide offers first time buyers a 5% deposit mortgage if you save with us through our Save to Buy scheme (conditions apply). Check out the details here.

The amount of deposit you put down will also have an impact on what mortgage interest rates you are offered, usually the larger the deposit the lower the interest rate and the monthly repayments. Check out our mortgage rates here.

3. Find out how much you can borrow
The next step is to look at how much a mortgage lender will actually lend you. This will depend on your personal circumstances e.g. whether it is a sole or joint application, what your incomings and outgoings are etc. To see how much you can borrow with Nationwide, use our affordability calculator here.

4. Choose the mortgage type, repayment method and work out your monthly repayments
There are many different types of mortgage that suit different needs and it's important that you understand how they work before making a decision. Here are two of the most common types of mortgage products on offer. For more information on how these mortgage interest rates work, visit Nationwide's website here.

Type of mortgage
Fixed rate – the interest rate on a fixed product will remain the same over the period you take the rate for, usually two, three or five years. This is good for budgeting as you know exactly what your monthly repayments will be for that period.

Tracker mortgage – interest rates on a tracker product can go up or down, meaning your monthly repayments will too. They track the rate set by the Bank of England, which is good for your pocket if the rate goes down, but not so great if it goes up.

Repayment method
The most common way to repay your mortgage is on a repayment basis. This is where the capital (the amount you borrow) and the interest are repaid each month, so your mortgage will be paid off by the end of the term you've chosen (e.g. 25 years).

For other ways to repay your mortgage, contact your mortgage provider.

Monthly repayments – you need to think about what term you want to take the borrowing over. It may seem appealing to keep the monthly payments low by taking the mortgage over a longer term (e.g. 30 years), but you will end up repaying more in total as you are borrowing the money for a longer period. You can use Nationwide's payment calculator to compare monthly payments at different interest rates over different terms.

5. Help yourself get a mortgage
Before a lender will actually give you a mortgage they will conduct a 'credit score' as part of your application process. They use the information that you provide on the application form and any data supplied from credit reference agencies. Here are some ways to help improve your chances of getting the mortgage you want.

Check your credit file – there are three main credit reference agencies - Experian, Equifax and Callcredit. You can get a copy of your credit report from the agencies for a small fee.

Stay on top of any payments – your credit score will be better if you keep up all payments on any credit agreements you already have. Late or missed payments on your previous or current financial obligations may negatively impact your credit score.

Build a relationship – having an existing relationship with a lender, e.g. you have one of their current or savings accounts, may help your chances of getting a mortgage with them and you may benefit from better deals by being an existing customer of theirs.

What next?
If you follow the above steps you will have prepared really well for buying your first home and be in an ideal position to continue to the next steps. These are detailed in our independent First Time Buyers' Guide.

We wish you every success in buying your first home!