If you’re thinking of buying your first house or flat, then it’s likely you’ll have many questions about the mortgage process and how it works.

first time buyer couple

As independent mortgage advisers based in Edinburgh, ESPC Mortgages can provide expertise and insight into getting a first time buyer mortgage in Scotland and they can look at the whole of the market to get you the mortgage deal that’s best suited to you and your circumstances.

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To help you on your home-buying journey, we’ve answered some of the most common questions first time buyers ask about getting a mortgage below.

Quicklinks

How does the mortgage process actually work?

How much deposit do I need for a mortgage?

How much can I borrow for my mortgage?

Are there any first time buyer schemes available?

Can I get a guarantor mortgage?

How is the interest rate on a mortgage calculated?

Can I get a buy-to-let mortgage as a first time buyer?

Where to start with applying for a mortgage

How does the mortgage process actually work?

 As it’s your first time purchasing a property, you’ll likely have many questions about the mortgage process and how it works. Let us break it down for you with this overview.

The first step to obtaining a mortgage is to arrange an appointment with an independent mortgage adviser who can look at the whole of the market to get you the best deal. The adviser will begin by discussing your personal circumstances and potential eligibility for a mortgage, taking into account different factors. They can then advise you on potential options, repayments and different types of mortgages.

With your permission, the advisor can pass the information on to a lender to apply for an agreement in principle, which is a document outlining how much a lender is prepared to lend you for a property. It should be noted that this is not a formal mortgage offer as the lender will require a satisfactory property valuation and may also be subject to change if your personal circumstances alter in any way. This means you’re ready to go out and start making offers on properties.

Once you’ve had an offer accepted, you should contact your mortgage adviser, who will gather all the purchase details, advise you about documents to prepare and take you to a meeting to apply for the full mortgage.  It can take up to three weeks to get a mortgage approved.

Find out more about the different stages of getting a mortgage and buying a home, and how long they take.

How much deposit do I need for a mortgage?

A big concern for first time buyers is how much they will need to save for a deposit in order to purchase a home.

In the aftermath of the financial crash in 2008, lender’s tightened borrowing rules and often buyers required 10 per cent deposits. However, these rules were relaxed in later years and now many lenders offer 5% deposit mortgages.

Many buyers will choose to put down a larger deposit, however, as a bigger deposit means a smaller loan and lower monthly payments. Plus, interest rates tend to decrease as deposit size increases.

One issue to note is the loan to value, which means that lenders will lend up to 95% of the property valuation or the purchase price, whichever is lower. This means if you choose to bid over the valuation of a property, then you must provide the additional funds to do this.

In Edinburgh and the surrounding areas, properties are frequently sold for over Home Report valuation, so you should factor this in when working out how much you need to save in order to buy a home.

How much can I borrow for my mortgage?

Another key question and one that will determine the budget for your first home, is how much you’ll be able to borrow from a mortgage lender. While in the past, this was simply decided by your income – lenders would lend up to three or three and a half times your annual income – in recent years other factors are taken into consideration.

Lenders are increasingly focused on affordability, so they will take monthly commitments into account such as loan repayments and car finance. However, if you pay a bigger deposit then you may be deemed less risky and allowed to borrow a little more. Your credit score is also influential in determining how much you borrow.

Use our mortgage calculator to find out how much you can borrow and what your monthly repayments are likely to be.

Are there any first time buyer schemes available?

If you’re worried about saving enough to buy a first home, there are a number of schemes available to help boost your deposit and get you on the ladder. In Scotland, there’s the newly launched First Home Fund, the Help to Buy scheme for new build properties and there’s also LIFT.

Plus, you can also take out a Lifetime ISA which has replaced the Help to Buy ISA – it also offers a 25% government boost on savings, and the money can be used towards your first home.

Find out more about the different first time buyer schemes available and speak to an independent mortgage adviser at ESPC Mortgages to find out what the best scheme for you is.

Can I get a guarantor mortgage?  

Guarantor mortgages are another option for first time buyer. They enhance your borrowing power as a guarantor is provided to the lender, so if the borrower stops repaying the mortgage, the lender can chase guarantors for the missed payments. This makes you less risky as a borrower.

Not all lenders offer guarantor mortgages and there can be a more restrictive lending policy in place for those that do. Read more about guarantor mortgages and contact ESPC Mortgages to find out if this could be a good option for you.

How is the interest rate on a mortgage calculated?

Most mortgages are arranged on a capital repayment basis, which means every month you’ll pay a certain amount of the borrowed amount back along with the interest amount. The interest amount is calculated as a percentage of the total borrowed amount.

If you have a fixed rate mortgage, the interest rate on the amount you have borrowed will remain the same for a certain amount of time.

With a variable rate, the interest rate could change from month to month. Most tracker rates follow the Bank of England base rate, which is currently 0.75%.

Interest rates are very low at the moment, which is positive news for borrowers.

Can I get a buy-to-let mortgage as a first time buyer?

If you’ve never owned a property before, and are interested in making your first purchase a buy-to-let, you may be limited as many buy-to-let mortgages require you to own your own property before they will offer a buy-to-let mortgage.

It’s worth seeking independent mortgage advice from the team at ESPC Mortgages to fully understand the options available to you.

Where to start with applying for a mortgage

A key question that you’ll be asking yourself with buying your first home and getting a mortgage is where you should begin. At ESPC, we recommend arranging an appointment with ESPC Mortgages to get some advice – the first appointment is free!

Our independent mortgage and protection specialists have a wealth of experience and will take you through the mortgage process. They will start by arranging an agreement in principle, so that you can go out and start making offers on properties

Once you’ve had an offer accepted, ESPC Mortgages can take you through the full mortgage application and remaining steps.

Get in touch

To arrange a meeting with one of our expert mortgage advisers, get in touch today – fill out the form below, email us at fsenquiries@espc.com or call us on 0131 253 2920. You can also drop into our offices at the ESPC Property Information Centre at 107 George Street, EH2 3ES, where we also provide property expert advice.

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The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.

The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.