If you’re thinking of buying your first home, you’ll be no doubt thinking about where to go for your first mortgage. It’s not a decision to take lightly; a mortgage is a long-term financial commitment and there are many things to consider before you step on the first rung of the property ladder. It pays to do your research and assess your financial situation before deciding on a deal, as the wrong choice could end up costing you thousands of pounds or worse, your new home.

There’s no denying that, in today’s shattered economy, actually finding and being accepted for a mortgage is difficult, but knowing what lenders look for and the types of mortgages available will stand you in good stead.

It stands to reason that if you’re planning on buying a home you’ll already have a good idea of what you can afford to repay per month, and will have looked around your local area to see what the typical house prices are for the style of property you want. If you’ve settled on a house you would like to buy, the next step is to decide on what type of mortgage would suit your circumstances. Using online mortgage calculators are a good idea to use as they will give you an idea of the options available to you.

There are several factors to consider; whether you’d want a mortgage with a fixed rate period followed by a potentially large increase in repayment amounts once the term ended, or a tracker mortgage: monthly repayments which would fluctuate from month to month depending on the base rate. Interest-only mortgages are another option, where the homeowner pays off just the accumulated interest per month and, at the end of the mortgage term, pays off the remainder.

A different type of mortgage is surfacing which may be good news for some first-time buyers; the ‘split’ mortgage. Currently being promoted by several high street banks, the split mortgage has the advantage of combining two of the most popular types of mortgage. After an initial fixed term of up to 5 years, the mortgage automatically converts to a base-rate tracker mortgage, allowing the homeowner the flexibility of overpaying when they can afford it and enjoying a lower rate of repayment for the remainder of the mortgage life. For those homeowners who would otherwise switch to a tracker mortgage when the initial period of their fixed term mortgage ends, the split mortgage would appeal because it removes the need to shop around for tracker deals.

Once you’ve researched thoroughly and provisionally decided on the type of mortgage to go for, it’s time to do some damage control. This involves checking your credit report to make sure there’s nothing on there which could impede your mortgage application; missed payments, defaults or even not being on the Electoral Roll could mean the difference between getting your mortgage and having your application refused. If everything looks OK, you’ll then need to look at various mortgage providers.

Each one will offer a different rate, so it’s better to check out as many as possible. Don’t feel obligated to accept the first offer; haggle, get several quotes and consider each option carefully. If you’re not sure where to start, try seeing what deals your bank can offer you. Often you’ll get the best deal here as they will have some idea of how you manage your finances already. Ask to speak to a mortgage specialist who will be able to advise you thoroughly of your options.

It’s worth keeping in mind that the mortgage itself is not the only cost involved in buying a house. Almost all mortgages require you to pay a percentage of the total cost yourself, which is typically between 60% and 80%. However, as of the 30th April some lenders will be offering a 90% mortgage, which is good news for someone who may not have been able to save up a large deposit. To put this into some kind of perspective; with the average house price in the UK currently at around £168,000, a typical 75% mortgage would require a deposit of £42,000. However, with a 90% mortgage this figure could be slashed to just £16,800. Of course these higher LTV (loan-to-value) mortgages are generally offered to applicants with better credit scores, which is why it’s a good idea to find out what yours is before applying.

This is by no means a comprehensive guide to choosing and applying for a mortgage. It should however give you some insight into where to begin if you’re planning to buy your first home. Always seek professional financial advice before finalizing your decision.

Louise Tillotson is a financial author for moneysupermarket.com

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