Mortgage guide for beginners.

Owning a home is a dream for many, so use this mortgage guide for beginners to navigate the mortgage maze.

Fear not, intrepid house-hunter! This guide unravels the basics of mortgages, empowering you to make informed decisions on your property journey.

Mortgage Must-Knows:

What is a mortgage?

Simply put, it’s a loan from a lender (bank, building society) that is secured on a property. This allows you to purchase the property. You repay the loan (plus interest) over a fixed term, typically 25-35 years.

What is a fixed-rate mortgage?

Fixed-rate mortgages provide stability of payments as your monthly payment is fixed at a rate of interest for a set period.

What is a Standard Variable Rate Mortgage (SVR)?

SVR mortgages fluctuate with rises and falls in interest rates.

What is a Tracker Mortgage?

Tracker mortgages follow the Bank of England base rate or the lender-chosen rates.

What is a Discount Mortgages?

A Discount mortgage offers a discount below a specific interest rate for a particular period.

What is the Deposit?

A lender wants to see that you have saved money toward the purchase price.

The deposit can also be a gift from friends, family, etc. Generally, you’ll need at least a 5% deposit of the property value.

Aim for a higher deposit to secure a better interest rate deal and reduce your loan amount and subsequent monthly payment.


Lenders assess your repayment ability based on income, outgoings, and credit score.

Use affordability calculators on lenders’ websites to get a ballpark estimate. Ensure you include all income, including any benefits and student loans, and all liabilities and loans, including child care costs.

Mortgage fees:

Some lenders charge product fees, which can be paid at the application stage or added to the loan. In most instances, valuation and survey fees will apply. There are different types of surveys and valuations.

In addition, a solicitor will have legal fees to act on your behalf.

They conduct conveyancing to ensure everything is in order regarding property ownership and boundaries and to transfer money securely.

Mortgage guide for beginners Key Terminology:

Interest rate:

The annual percentage charged on your loan amount. Lower rates translate to lower monthly repayments.


The duration of your mortgage is usually 25-40 years. Longer terms mean smaller monthly payments but higher overall interest costs.

Loan-to-value ratio (LTV):

Your deposit amount is a percentage of the property value. Higher LTVs often attract higher interest rates.

Decision in Principle (DIP):

A DIP helps you understand how much you could borrow before you apply for a mortgage.

It’s also known as a Mortgage Promise or Approval in Principle and is often seen as the first step to buying or remortgaging a home.

A decision in principle, is obligation-free, involves a credit check and credit score check, and gives you a very good idea of whether the lender is prepared to offer you a loan.

Stamp Duty:

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a specific price in England and Northern Ireland.

For first-time buyers, it is currently 0% up to a purchase of £425,000.

Read here for more about Stamp Duty and a calculator.

Mortgage broker:

An authorised and regulated professional adviser who compares mortgages across lenders to find the best deal for you.

Appoint an Independent adviser, as they can use and search the whole market instead of being tied to one lender or even a small panel.


A title deed is the legal evidence of the ownership of the property. The land registry will hold all the details; your Solicitor deals with this.


After completing all due diligence and checking your supporting information, the lender will issue an official offer outlining the loan amount and terms if you meet their criteria.

Mortgage guide for beginners-your steps to Mortgage Success:

Assess your finances:

Calculate your affordability range and desired deposit amount.

Improve your credit score:

Check your credit report and address any errors. Timely bill payments and manageable debt improve your score.

Read more about what your credit report is.

Get all your ducks in a row:

Gather required documents, such as payslips, proof of all incomes, bank statements, and up-to-date IDs, such as passports, driving licences and utility bills.


Appoint a solicitor to handle the legal aspects of the property purchase.

Appoint a Mortgage Adviser:

Ask for a recommendation from a friend or family and check they and their firm are authorised by the Financial Conduct Authority (FCA)

Call us if you need fully authorised and regulated financial and mortgage advice from an Independent adviser.