Aim to have six months’ worth of mortgage payments, as well as basic household expenses – such as bills and food – set aside in a savings account that can be accessed in an emergency.

Even having a couple of months’ worth of expenses in savings can give you breathing space in case you lose your job, or your circumstances change.

If you’re a first-time buyer or looking to move home or remortgage, we can help you find the best mortgage deal to suit your needs.

Once you move into your new home you will need to start making monthly repayments on your mortgage. If you miss any payments, the amount you owe could increase and your credit record could be damaged. If you fall too far behind your lender could repossess your house.

If you set up a direct debit to pay your mortgage, you will never miss a payment as long as there is enough money in your bank account.

Mortgage lenders have different standards and requirements. The following factors will affect whether lenders will offer you a mortgage and how much they will be willing to lend to you:

• The value of the property
• Your deposit
• Your age
• The length of the mortgage term
• Your credit record 
• Your income
• If you are applying solely or jointly

Once you have a mortgage in principle and you’re ready to apply for your mortgage in full, you’ll need to take the steps below:

Get your documents ready, including your ID (such as a passport or driving license), your proof of address (such as a utility bill), proof of income (at least three months’ payslips and your P60), and proof of deposit. If you’re self-employed, you will usually need the last two to three years’ worth of accounts. Sending a credit report is also useful to help the mortgage broker collate the right credit information such as check my file who search three credit bureaus – https://www.checkmyfile.com/?ref=bettermortgage&cbap=1**
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• Complete your mortgage application. You will need to give your lender details of the property you want to buy, including the price you’ve agreed to pay.
• Appoint a solicitor to draw up the contracts and handle searches.
• Get a home survey. This needs to be carried out on the property you’re buying to check its value and condition. You can choose whether you want a more basic condition report, a more comprehensive homebuyer report or a full structural survey to give more detailed information about the property’s condition.
• Exchange contracts. Once your mortgage is approved and you’re ready to make your purchase, your solicitor will exchange contracts of the sale with the seller’s solicitor.
• The next step is completion. This is the date the money is transferred to the seller and you legally own your new home and can move in.

You will need to:

• Save a deposit if you are buying your first home. You could use the equity in your home towards the deposit if you own your current home.
• Find the property you want to buy
• Find a mortgage through service or speak with a lender direct.
• Make sure you can afford the mortgage you choose
• Get a mortgage agreement in principle, which will let you know approximately how much you could borrow
• Put in an offer on the property
• If your offer is accepted, take out the mortgage

There are several different ways that mortgages can set their interest rates:

Variable mortgage rates can change at any point, although they usually rise and fall roughly in line with the Bank of England Base Rate. 

Fixed rate mortgages guarantee that the interest rate will not change for a set period, usually between one and five years.

Tracker mortgages have variable rates that follow the Bank of England base rate exactly. A mortgage set at 2% above the base rate would be 2.5% with the base rate at 0.5%. If the base rate later went up to 1%, the mortgage rate would change to 3%.

Discount mortgages offer a rate set at around one or two percent less than the lender’s standard variable rate. The rate will rise and fall with the lender’s standard variable rate, and the discount will last for a set period of a year or more.

Once you have your mortgage in place, if you miss a monthly repayment, you will likely be charged a late payment fee by your lender. On top of this, the missed payment(s) will be reported to the credit reference agencies and this could have a negative impact on your credit score.

If you think you might miss a monthly repayment, or you already have, it’s crucial that you speak to your lender as soon as possible. They will work with you to find a solution to help you get back on track, whether that’s offering you a payment deferral for a short time, a period of reduced payments or an extension to your mortgage term.  

Whatever you do, don’t buy your head in the sand – talk to your lender straightaway.

The amount you have to pay each month and in total over the life of your mortgage depends on the deal you get and the cost of the property.

Here are the costs of a mortgage explained in detail and how to work out if you can afford one. The main costs are:

Interest 

The interest rate will affect how much you have to repay overall and what you pay each month.

It is accrued across the lifetime of the mortgage and is charged as a percentage rate on the amount you owe.

For example, if you took out a £200,000 mortgage with an interest of 4% over 25 years, you could pay interest of £116,702 and repay a total of £316,702.

The mortgage in the above example could cost around:

• £1,056 per month with an interest rate of 4%
• £1,289 per month at 5%

You can work out how much interest would cost on a mortgage for the amount you need. Many lenders websites show you the amount you would have to pay each month, the total interest amount and an illustration of how much of the balance you would pay off each year.

Mortgage fees

• Product fees are charged for taking out the mortgage
• Application fees can be charged when you apply for a mortgage, whether you end up taking it out or not
• Valuation fees may be charged by your lender for working out how much your property is worth
• Higher lending charges come with some mortgages if you have a small deposit
• CHAPS transfer fees are charged when the bank transfers the money, they are lending to you (usually to your solicitor)
• Broker fees can be charged if you take out a mortgage recommended by a broker, however the better mortgage company offer fee free advice, unlike many of competitors.

You may also have to pay fees on your old mortgage:

• Early repayments charges if you pay it off before the end of its term
• Exit fees are charged on some mortgages when you move to a new lender