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29 September 2023

A handy first time house buyer guide to the mortgage market

This helpful guide from The New Homes Group reveals the essentials which first time buyers need to know when they start looking at getting their first mortgage

Buying your first home should be an exciting time but, for many, finding one’ way around a complex mortgage market can feel very daunting. Terry Higgins, The New Homes Group’s Group Managing Director for New Build Mortgage Services, reveals all…

Taking out a mortgage is a big financial commitment and one of the biggest financial decisions you will ever take in your life. For many first time buyers, this can feel overwhelming and trying to understand all the jargon (

FTB’s, LTV’s, SVR’s, AIP’s, ERC’s) can feel like learning a completely new language.

However, help is at hand and you don’t need to do it all yourself. A good mortgage broker will do all the leg work for you including helping you to understand how much you can borrow. Lenders are governed by strict rules and will not lend you more than you can afford but you also have to be comfortable with the repayments. It’s a good idea to sit down with a recent bank statement and look at your income and outgoings each month; this will start to give you an idea of your monthly affordability.

You credit score can also influence how much a lender will allow you to borrow. Lenders will carry out a credit check to identify how you have managed any previous debts. There are multiple different factors that could have a negative impact on your credit score. These include:

• Missing a debt/loan/credit card repayment

• Being connected to someone else financially who holds a bad credit score – be cautious when setting up joint bank accounts or credit arrangements

• Having a large collection of credit arrangements – lenders may be concerned with your capability to properly manage so many different debts

• You are more likely to be accepted for a mortgage if you have a high credit score.

This is because lenders will see you as a lower risk customer and less likely to miss any of your mortgage payments. If you have a low or poor credit score, there are ways to improve this and increase your chances of being accepted for a mortgage:

• Make sure you are enlisted on the electoral roll – not being on it can negatively impact your credit score

• Being in full-time employment or, if self-employed, able to show two years’ worth of accounts

• Living at the same address for a few years

• Close any credit accounts you are no longer using, e.g. credit cards

• Pay down any large credit balances you hold and ensure you pay on time with no missed payments

It can often be the case with first time buyers that having no credit history can also negatively impact your credit score. However your mortgage broker can check all of this and will work with you to improve your score.

Finally, and most importantly, you will need to consider how much deposit you have or will need. Currently you will need at least a 5% deposit – but generally the bigger your deposit, the more choice of mortgage products and the lower the rate will be (and your monthly payment of course). Your deposit is so important but remember there are other costs like conveyancing fees and valuation fees. In England, a first time home buyer only pays stamp duty if the property is above £300,000 in value. For the full rules on Stamp Duty rates, go to www.gov.uk/stamp-duty-land-tax.

Make sure you speak to a good mortgage broker who specialises in new build properties, such as New Homes Mortgage Helpline. They offer help for first time buyers and can guide you through the whole process and ensure you get the right mortgage product for your personal circumstances and guide you through the homebuying process. Remember if you speak to your bank they can only offer their own products whereas a broker will have access to over 12,000 mortgage products.

For a fresh start in a new Tilia Home, view our developments to explore the homes currently available by location and find out about the great incentives we have to help get you moving.

New Homes Mortgage Helpline is part of The New Homes Group, the UK’s leading new homes specialist.

Handy blogs 22.9.22

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