The homebuying mistakes first-time buyers make (and how to avoid them)

Key takeaways

• Don’t just go straight to your bank. Comparing the whole market or speaking to a mortgage broker can help you get a better deal.
• A mortgage rejection isn’t the end of the road! Other lenders and schemes could help where one said no.
• Checking and improving a credit score before applying can make a big difference to your mortgage eligibility.
• The deposit isn’t the only cost. Factoring in fees, charges, and affordability checks early helps avoid surprises.
• Exploring all available options, from government schemes to family support, is essential before ruling out homeownership.

1. Going straight to your bank

When you’re ready to apply for a mortgage, it can be tempting to go straight to the bank you’re most familiar with, as this can seem like the easiest option. But heading straight for your bank can come at a cost. Those loyalty rates might not be as competitive as the rates offered by less familiar lenders.

Buying a home is one of the biggest financial decisions someone will ever make, so it makes sense to shop around and compare multiple offers, just like they would with any other major purchase.

Even a small difference in interest rates can add up over time, leading to higher monthly repayments and potentially costing you thousands of pounds more over the course of your mortgage term.

A comparison website is a decent starting point, but it won’t show everything. A mortgage broker will compare hundreds (or in our case, thousands) of mortgages from a wide range of lenders. Some of these deals can only be accessed through a broker, so they won’t even appear on a comparison website.

2. Giving up after the first rejection

Applying for a mortgage and getting rejected can hurt, but it doesn’t necessarily mean you’re “unmortgageable.” There are lots of reasons a mortgage application might be turned down, including:

• Not quite meeting a lender’s affordability criteria
• A credit score that needs some attention
• Irregular or unpredictable income

Getting rejected by one lender doesn’t mean every lender will say no. An expert mortgage broker like us can help you figure out what went wrong and improve your chances next time. A good broker will also know which lenders have more flexible criteria and can identify any affordability challenges before a new application is submitted.

The important thing is not to give up after one setback. There’s nearly always another route to explore!

Learn more: What can stop you from getting a mortgage?

3. Not paying enough attention to your credit score

If you’ve never needed to borrow money before, your credit score might not be something you’ve ever had to think about. But when applying for a mortgage, it’s one of the first things a lender will check, and it can make or break your chances of being approved.

That’s why it’s worth checking early. With CheckMyFile, you can see your credit history from three credit agencies instead of one - Experian, Equifax and TransUnion. So it's easy for you to spot any issues dragging your score down.

If something doesn’t look right, here are a few quick wins that can help:

• Registering on the electoral roll at their current address
• Paying off or reducing any outstanding debts
• Avoiding multiple credit applications in a short period
• Checking for errors on their credit file and disputing any inaccuracies

Learn more: 7 financial red flags that mean you’re not ready to buy a home yet (and how to fix them)

4. Only thinking about the deposit

When saving for a first home, it’s easy to focus solely on the deposit. After all, it’s one of the biggest (and the most talked-about) obstacles standing between first-time buyers and their dream home.

But even once you’ve saved a deposit, the challenges don’t end there. You could have a deposit of 20% or even 30% of the property’s value, only to struggle to get a mortgage big enough for the home you want. This all boils down to lenders’ affordability criteria, which takes into account income, outgoings, credit history and current interest rates to determine how much you can borrow without being put under too much financial pressure.

Each lender will have their own methods, but most will multiply your income by a set figure (usually 4.5) to determine the maximum amount they’re willing to lend you.

So, if you earn £30,000 a year, for example, you could expect to borrow around £135,000 for your first home. If that’s not enough to get on the property ladder, it’s worth knowing that some lenders are willing to offer a mortgage of 5 or even 6x your income, so speaking to a broker to weigh up options is a smart move.

Keep in mind that your income isn’t the only factor which influences what a lender will offer you for a mortgage. Things like your outgoings or outstanding debts also have an impact. You can find out more in our blog on mortgage affordability.

Now that affordability is a bit clearer, there’s something else to think about besides the deposit, fees and charges. Your deposit might be the biggest cost, but you will also need to budget for:

• Conveyancing fees
• Mortgage product or arrangement fees
• Valuation and survey costs
• Moving expenses
• Stamp duty (in some cases)

It’s well worth budgeting for these costs early, so there are no nasty surprises further down the line.

So now it’s time for the biggest mistake we see budding homebuyers make, and that’s…

5. Not exploring your options

Many first-time buyers don’t even get the chance to make the mistakes above because they assume homeownership is completely out of reach and so they don’t even try. It’s true that in many ways, buying a house is more challenging than ever. But there’s more help for first-time buyers available than most people realise, from government schemes to family-assisted mortgages. And we should know, as it’s our realm of expertise..

For example, opening a Lifetime ISA means that for every £4 saved, the government adds an extra £1. You can save up to £4,000 each tax year, meaning you could receive up to £1,000 in bonus each time they max out their account.

And if you’re buying with a partner who's also a first-time buyer, you can open a LISA each, effectively doubling the government bonus. At Tembo, we offer our competitive Cash Lifetime ISA. After 5 years of saving into a Tembo Cash Lifetime ISA, you could get hundreds more in your pocket than the next best rate on the market.

If a traditional deposit feels out of reach, consider these alternative pathways:

• Family Support: Using a guarantor mortgage or a Deposit Boost via a family member's equity.
• Low Deposit Schemes: Buying with as little as 5% through the Mortgage Guarantee Scheme or Deposit Unlock.
• Shared Ownership: Buying a share of a property and paying rent on the remaining portion.

Ultimately, the biggest mistake any aspiring buyer can make is ruling yourself out before they’ve explored what’s possible. With the right plan (and the right advice), you might be closer to owning a home than you think!