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I want to buy my first house, where do I start?

What is a mortgage?

A mortgage is a loan that is taken out to help you purchase a property. You will be required to pay a percentage of the purchase price in the form of a deposit, while your mortgage provider will lend you the remaining amount using your house as security until the loan has been paid off in its entirety.

This means that should you fail to make your repayments, your lender has the legal right to repossess your home.

What are the different types of mortgage available to me?

There are several types of mortgages that are split into two categories: fixed rate and variable rate mortgages.

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Fixed rate

A fixed rate mortgage means that the interest rate on your mortgage will stay the same for a set period of time, as agreed by you and your lender. If you want to get out of a fixed deal early you may need to pay an early repayment charge. The early repayment charge payable will depend on the fixed rate product you choose.

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Variable rate

With a variable rate mortgage the amount you will pay from one month to the next may fluctuate according to the interest rate, which is usually set in-line with the Bank of England’s Base Rate. There are a range of variable mortgages to choose from: tracker, standard variable rate (SVR), capped, offset and discount. Be aware that not all variable rates are set in-line with the Bank of England Base Rate. For example, the Standard Variable Rate is set by the Bank and has no direct link to the Bank of England Base Rate.

You may also have three options to choose from when deciding how you repay your mortgage:

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Repayment mortgage

Also known as a capital and interest mortgage, this allows you to repay your mortgage by paying off a portion of the interest and the capital in your monthly repayments.

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Interest only mortgage

As you will only be repaying the interest charged on your mortgage, your monthly payments will be much smaller, however, at the end of the mortgage's term you will need to be able to repay the entire outstanding balance. You will need to ensure you have a repayment vehicle e.g. savings plan to repay this mortgage balance at the end of the term of the mortgage.

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Part interest only and part repayment mortgage

You may choose to take out a portion of your mortgage on interest only and a portion on repayment. It is vital that you have the funds available at the end of the term to repay the outstanding balance. You will need to ensure you have a repayment vehicle e.g. savings plan to repay this mortgage balance at the end of the term of the mortgage.

alert icon   Please note The Co-operative Bank does not currently offer new interest only lending. For all new mortgage customers, the secured loan must be on a capital and interest repayment basis.

What’s my first step?

first steps iconReview your finances before approaching a mortgage provider. Think about your monthly income and outgoings, as well as the balance in your savings account, as you’ll want to make sure that you can not only afford to put down a deposit on a property but that you’ll be able to make your mortgage repayments. You'll also need to think about any additional costs associated with buying a property such as solicitors fees, valuation fee and stamp duty.


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Next step

How do I budget for my first mortgage?

In this section you can find out about budgeting and what you'll need to save and other costs you'll need to factor in. It also explains what factors are taken into account when your lender is assessing your income

Learn how to budget
Your home may be repossessed if you do not keep up repayments on your mortgage