What Is a Mortgage?
A mortgage is a loan used to buy a property. The lender gives you the money upfront, and you repay it — plus interest — over an agreed term, typically 25 to 35 years. The property itself acts as security, meaning the lender can repossess it if you stop making payments
Understanding the basics before you start house hunting puts you in a much stronger position when it matters most.
How Much Can You Borrow?
Most lenders will offer between 4 and 4.5 times your annual income. So if you earn £40,000 a year, you could typically borrow between £160,000 and £180,000. Some lenders will go higher depending on your circumstances.
Your deposit also plays a big role. The more you put down, the lower your loan-to-value (LTV) ratio — and the better the interest rates available to you.
Types of Mortgage
Fixed Rate
Your interest rate stays the same for an agreed period — usually 2, 3, or 5 years. This gives you predictable monthly payments and protection against rate rises. Most first-time buyers opt for a fixed rate for the peace of mind it offers.
Tracker Rate
Your rate moves in line with the Bank of England base rate. Payments can go up or down month to month, which means less certainty but potential savings if rates fall.
Repayment vs Interest Only
With a repayment mortgage, each monthly payment reduces your balance as well as covering the interest. By the end of the term, you own the property outright. With interest only, you only pay the interest each month — but you'll need a separate plan to repay the original loan amount at the end.
What Is a Mortgage in Principle?
A mortgage in principle (MIP) is a statement from a lender saying they'd be willing to lend you a certain amount, based on an initial assessment. It's not a guarantee, but it shows estate agents and sellers you're a serious buyer. Getting one before you start viewing properties is strongly recommended.
What Costs Should You Budget For?
Beyond your deposit, there are several other costs to factor in:
Stamp Duty Land Tax is payable on properties over a certain value — the amount depends on the purchase price and whether you're a first-time buyer. Solicitor or conveyancing fees typically range from £1,000 to £2,000. A survey assesses the condition of the property and can cost anywhere from £300 to £1,500 depending on the level of detail. Mortgage arrangement fees may be charged by the lender, though these can sometimes be added to the loan.
Why Use a Mortgage Broker?
A broker searches the whole market on your behalf, not just one lender's products. This means access to better rates, specialist lenders you wouldn't find on a comparison site, and expert guidance through the entire application process.
At NP Mortgages, we handle everything from your initial assessment right through to completion — so you can focus on finding the right home.
Ready to Take the Next Step?
If you're thinking about buying your first home, the best thing you can do is start a conversation early. The more time we have to prepare, the smoother the process will be.
Get in touch with NP Mortgages today and let's get you mortgage ready.