A guide to buying your first home
If you’re looking to buy a home for the very first time, you don’t have to do it alone. Talk to our dedicated advisers and you’ll enjoy expert help every step of the way.
From saving for your deposit and finding the right mortgage, to making sure you and your home are protected from the unexpected, we’re here to make sure your first move’s a smart one.
Work out your budget.
The first thing to do when you’re starting out in the property market is set yourself a budget. Owning a home is a serious commitment and you need to be realistic about what you can afford.
By adding up all your monthly expenses you’ll soon see what you’re left with:
- Food
- Gas and electricity
- Fuel and travel
- Council tax and water rates
- Phone and broadband
- Credit cards and loans
- Clubs and memberships
- Clothes and entertainment.
You also need to factor in some of the additional costs you may incur as a homeowner, things like home insurance and life and critical illness cover.
Improve your chances of getting credit approval.
- The better your credit rating, the better your chances of being approved for a mortgage. Follow our simple tips and it will also get you into the habit of sensible money management
- Make sure you always meet the terms of any credit agreement you enter into
- Always make your repayments on time, missed payments and County Court Judgements (CCJs) can count against you
- Don’t go over the agreed limit on your credit card or overdraft facilities
- Try to reduce the amount of times you use your overdraft
- Pay more than the minimum balance on your credit card, whenever you can
- Close down any unwanted credit facilities
- Make as few applications for credit as you possibly can
- Reduce your amount of unsecured debt (unless you have an asset to show)
- Register on the Electoral Register
- Keep companies up-to-date with your change of address details every time you move.
Save up for your deposit.
Once you’ve got an idea of the kind of price range you should be looking at, you need to get your deposit together. The good news is we’ve got the perfect tool for the job.
Our Regular Home Saver Account provides up to £1,000 cash back when you reach your target and take out a mortgage with us. Here’s how it works:
- Make a minimum deposit of £200 every month for a minimum of 12 consecutive months*. One payment holiday is permitted during a 12 month calendar period
- 40 days notice is required to make withdrawals however this will be waived if the funds being withdrawn are used as all or part of a deposit to purchase a property with a Clydesdale Bank first time buyer mortgage
- Get £1,000 cash back if you save a deposit of at least 10% of the property value**, subject to approval of your 90% Loan to Value# Clydesdale Bank fixed rate first time buyer mortgage
- Get £500 if you save a deposit of at least 5% of the property value**, subject to approval of your 95% Loan to Value# Clydesdale Bank fixed rate first time buyer mortgage.
With our Regular Home Saver Account, you’ll quickly get into the habit of putting some money aside each month which will come in handy when you start making your mortgage payments. Better still, with up to £1,000 cash back when you take out a mortgage with us, you could enjoy a little extra cash to spend on your new home.
* Over 13 consecutive months if you have utilised the payment holiday option in any 12 month period.
** Property value is defined as the lower of the purchase price or mortgage valuation.
# Loan to Value means the ratio of the amount you wish to borrow against the property value you are purchasing.
Don’t forget…
…you’ll also need to save enough to cover a number of extra expenses associated with buying your own home:
- Valuation fees - your lender will arrange to have a basic valuation of the property carried out to make sure it is worth the sale price. If you take out one of our first time buyer mortgages, we'll pay your valuation fee provided you use our panel. For added peace of mind you may also wish to consider a more detailed Homebuyers Report or Structural Survey. Additional costs will apply for these
- Arrangement fee – this may be charged by your lender and covers the costs involved in setting up your mortgage. You may also be charged a Funds Transfer fee which covers the same day transfer of the mortgage funds to your solicitor
- Legal fees – a solicitor or conveyancer needs to make sure all the legal documentation is in order, and that your interest in the property is registered. Your solicitor will also carry out any local authority searches required
- Stamp duty – the Government charges stamp duty on residential properties over a certain value. For details of the current stamp duty thresholds and rates, please visit www.hmrc.gov.uk
Make your move with a choice of first time buyer mortgages.
Mortgages can be confusing but we’re committed to helping you get the right one. What’s more, we could even help you get your foot in the door sooner, with deposits required from as little as 5%. Of course, it all depends on your individual circumstances. But whichever one you do choose, you can take advantage of:
- Low deposits – move in sooner with as little as 5% deposit to pay on a repayment mortgage
- Fixed rates – keep budgeting simple with fixed monthly payments
- Valuation panel – we currently pay your valuation fee provided you use our panel
- Quick decisions – helping you move fast when you find a place you want
- Range of insurances – make sure you and your home are covered
- Award winning – it’s reassuring to know you’re with a stable, trustworthy lender.
Decide how you want to pay.
There are two basic ways to pay off your mortgage - interest only or repayment. We recommend that you seek some expert advice before you decide which is best for you. But in the meantime, let us outline how each payment type works.
Repayment.
A repayment mortgage includes both a payment against your mortgage balance and an interest payment. This means you’re constantly reducing the size of your debt. You’ll make regular repayments for an agreed period of time. Then at the end of this period, your loan and the interest added will be paid off in full - assuming you’ve made all your repayments on time.
Interest only.
A larger deposit is typically required for an interest only mortgage. Here you pay only the interest on what you have borrowed. The outstanding balance does not reduce meaning at the end of the mortgage term you still have to pay the full amount you borrowed to buy your home. In order to do this you will need to pay into an investment plan that provides the necessary funds.
Whichever mortgage you choose, with our first time buyer fixed rate deals, you’ll always find it easy to plan ahead because you know what you’re paying every month.
Taking out a mortgage with us is easy.
Not sure where to start? We can guide you through every step of the way.
- Arrange an appointment with one of our friendly advisers.
- They’ll chat through your individual situation, help you find the right mortgage, work out how much you can borrow and provide you with an illustration showing all the important details of your recommended mortgage product.
- Now that you know how much you can borrow, it’s time to go out and find your perfect home. Don’t just rely on an estate agent. Do your own research to get an idea of prices in the area you’re interested in. When you find the property you want, stick to your budget and be prepared to walk away.
- Appoint a solicitor to make an offer on your chosen property and wait to find out if it’s accepted - it’s a good idea to find a solicitor who operates on a `no sale, no fee’ basis. Then if the sale does fall through, you won’t be out of pocket.
- If your offer is accepted, contact your mortgage adviser to complete your application. Remember, your application will move along much faster if you have all the documentation required - see application tick list.
- We’ll arrange to have the property valued. Once the valuation’s in, we’ll send you an offer letter.
- You’ll need to arrange your moving in date and speak to your solicitor about how to pay your deposit. Then on the given date, your mortgage account will be opened and the funds will be released. And that’s it - you’ll have a new home and a new mortgage.
Your application tick list.
For a completely stress-free application, make sure you’ve got the following information to hand:
- Your bank details
- Your gross annual income
- Your most recent P60
- Your last three months’ salary slips
- Proof of ID - something like a driving licence or a passport but other documents are also acceptable.
If you’re not already a Clydesdale Bank customer or hold your main account with another lender, you will also need:
- Three months’ bank statements showing your monthly salary
- A utility bill issued within the last 3 months, showing your current address (unless you are on the voters roll).
We will also ask you for details of your monthly expenditure. Outgoings to consider before applying are:
- Credit Cards
- Loans
- HP/Rental
- Maintenance/alimony/childcare/school fees
- Other mortgage payments
- Buildings Insurance
- Car Insurance
- Other Insurances
- Gas/electricity/other heating
- Council Tax
- Water Rates (England only)
- Ground rent/service charge
- Essential travel
- Telephone (mobile and landline)
- Other essential expenditure
The future availability of 90% and 95% LTV mortgages from Clydesdale Bank cannot be guaranteed. If our maximum LTV is lower e.g. 80%, you will require a deposit of 20% but you will still qualify for £1,000 cash back.
Do I need a deposit?
Yes - usually you will need to meet part of the purchase price from your own funds. The amount of deposit you need depends on the loan to value limit of the type of mortgage you choose. Loan to value (LTV) is simply the amount you need to borrow, expressed as a percentage of the value of the property you want to buy.
So if you need to borrow £90,000 to buy a home valued at £100,000, your loan to value would be 90%.
At present you would require a minimum of 5% deposit against the property value or purchase price, whichever is the lower figure. However there are other costs to keep in mind when considering how much you need to save; you'll need money to cover costs such as solicitor's fees, stamp duty land tax and any other costs incurred in moving to your new home.
Please note that New Build Houses have a maximum loan to value of 90%, while New Build Flats carry a 70% maximum. Any property that’s less than 3 years old would be classed as a New Build.
How much can I borrow? How do I get an exact figure?
It’s all about affordability – not simply your salary. So we look at your income and your expenses, then work out how much you can reasonably afford to pay each month for your mortgage.
A rough guide to this is shown by using our Mortgage Affordability Calculator at the top of this page. If you are in any doubt please submit an online enquiry.
To obtain an indication of how much you could borrow you would be required to go through an appointment with one of our Mortgage Advisors. This would involve an affordability assessment as well as a credit score. Following this we will be able to provide you with an indication of whether we would be able to proceed with the application and how much we would be able to lend, subject to a suitable valuation. If you would like to proceed with this please submit an appointment callback.
Do I need to have a property in mind before I go ahead with a mortgage application?
No, we can go through the initial appointment without a specific property in mind in order to let you know exactly how much we would be willing to lend, subject to an appropriate valuation as well as additional terms and conditions.
What is loan to value?
Loan to value (LTV) is simply the amount you need to borrow, expressed as a percentage of the value of the property you want to buy.
So, if you need to borrow £90,000 to buy a home valued at £100,000, your loan to value would be 90%.
Can the fees be added onto the borrowing?
The arrangement fee, which covers the costs involved in setting up your mortgage, can be added onto the mortgage as long as this does not bring the total lending above the maximum Loan To Value for the product.
For first-time buyer applications the first standard valuation is instructed and paid for by the bank. Any subsequent valuation fee will require to be paid prior to the valuation being carried out but can be refunded upon completion of the drawdown of the funds and added to the borrowing at that point. Again, this is only possible if the extra borrowing does not exceed the loan to value for the chosen product.
The legal fees are paid directly to your chosen solicitor and, as such, cannot be included in any borrowing.
Do you offer guarantor mortgages?
Unfortunately we don’t offer guarantor mortgages. However we do allow up to 4 applicants including partners, friends or parents, to take out a mortgage, and we could take each applicant’s salary into account.
How does a fixed rate mortgage work?
Our range of fixed rate products are designed with stability in mind. For the length of the fixed term chosen the interest rates are guaranteed– this means your payment will remain the same throughout.
At the end of this term, unless you then change your type of mortgage, your rate would automatically transfer onto our Standard Variable Rate.
What information would you need to consider me for a mortgage?
If you are a permanent employee
As a minimum we would look for at least 6 months employment in your current position. In addition to this we would also require that you are not in any probationary period within your current role.
If you work on a permanent contract
If you have been in your current job for at least the last 6 months we may be able to lend on this basis.
If you work on a fixed term contract
You must have been in continuous employment for the past two years and have at least 12 months remaining on the current contract.
If you work on a renewable contract
If the contract length is a minimum of 6 months and has been renewed at least once then we may be able to lend on this basis.
If you are self employed
You must have been in business for at least 3 years and you have 3 years business accounts available. Please submit an online enquiry for a callback to discuss further.
Temporary contracts, such as seasonal work, would not be considered for lending on this basis.
