11 common first-time buyer mortgage mistakes (and how to avoid them)
Find out the most common mistakes and pitfalls for first-time buyers getting a mortgage, and more importantly - how you can prevent any unnecessary costs or delays.
Navigating the transition from renter to homeowner can be challenging if you don’t know what to watch out for before you begin the journey towards home ownership. Finder stats reveal that there were 967,000 first-time buyers in the UK last year – so you’re not alone, but there are steps you can take to put yourself ahead of the pack.
The mistakes
Whether it’s missing out on a government-backed boost or failing to look beyond your high-street bank, these first-time buyer mistakes could put you on the back foot in your property search or cost you thousands of pounds over the life of your loan.
We’ve broken these potential missteps into different categories to ensure you’ve got a well-rounded view of all the typical mortgage mistakes that we often see from first-time home buyers.
Strategy and planning mistakes
1. The loyalty trap
Many first-time buyers assume that because they’ve banked with the same place since they’ve been a student (or longer), they’ll be looked after with favourable rates. In reality, some lenders reserve their most competitive rates for new customers or borrowers with specific criteria.
The mistake
Limiting your search to a single lender or a handful of high street banks.
How to avoid it
Use a “whole-of-market” broker such as Habito. They scan thousands of products from over 90 lenders, including smaller building societies and specialist lenders that may have more flexible criteria for first-time buyers. Check if they’ll charge a fee (Habito won’t).
2. Miscalculating loan-to-value (LTV) tiers
A mortgage isn’t a sliding scale; it’s a series of steps. There can be a massive difference in interest rates between say, a 95% LTV mortgage and a 90% LTV mortgage.
The mistake
Putting down a deposit on a house, not realising that adding just a little bit more would move you into a lower interest rate bracket for the entire loan.
How to avoid it
Use a mortgage calculator to review where you stand with LTV tiers. Or better still get some help from a free adviser who can check for you. Sometimes, some extra money towards your initial deposit could end up saving you thousands in the long-run from the interest savings of moving into the next LTV threshold.
3. Waiting too late to get an “Agreement in Principle” (AIP)
In a competitive housing market, an AIP is your way of showing you’re a serious buyer. Sellers and estate agents rarely take offers seriously from buyers who haven’t proven they can actually get the money.
The mistake
Finding your dream home and only then starting the mortgage paperwork.
How to avoid it
You can often secure a digital AIP in minutes. Online brokers like Mojo or Habito make it a straightforward process and there’s no obligation to eventually get your mortgage through that particular lender or broker.
4. Failing to use the tools at your disposal
When getting a mortgage as a first-time buyer (FTB) most applicants don’t realise that lenders differ in their approach. For example, if you work within specific professions, you can borrow more with certain lenders who will offer higher salary multiples.
Or if you happen to earn additional income through overtime, bonuses, commission, or additional freelance work – some lenders treat this more favourably when calculating how much you can afford to borrow.
The mistake
Limiting how much you can borrow by not exploring lenders that may better suit your income type, profession, or affordability profile.
How to avoid it
Carry out a whole-of-market mortgage comparison with the support of a broker to see all your options and find the home loan that best suits your specific situation.
Money and credit pitfalls
5. Failure to manage your credit sensibly
It can be crucial to check your credit reports ahead of time and ensure there are no mistakes or areas that need improving. It’s also important to avoid taking out any new loans or borrowing more on credit while you’re in the process of getting a mortgage because it could impact your application by limiting your choice of lenders or preventing access to the lowest FTB mortgage rates.
The mistake
Failure to check your credit profile is in good shape or taking out new borrowing, changing jobs, or making massive purchases between the application and completion.
How to avoid it
Check your credit reports as soon as possible (it’s free!) and treat your credit as frozen from the moment you start your mortgage journey until the day you get the keys. Even small changes to your debt-to-income ratio can trigger a re-evaluation by a lender’s underwriting team.
6. Underestimating the hidden costs of buying a house
Your deposit is just the beginning of the process and most first-time buyers tend to underestimate or miscalculate all the less obvious costs of buying a home.
The mistake
Emptying every penny into the deposit and having zero liquidity (spare money set aside) for things like Stamp Duty, valuation fees, surveyor costs, or solicitor charges.
How to avoid it
Budget an additional 3% to 5% of the purchase price for additional move-in costs. Also, take a look at the UK Government Stamp Duty (SDLT) calculator early to avoid any nasty surprises on completion day.
7. Attempting to do it all on your own
The mortgage market can feel full of jargon with SVRs, ERCs, stress-testing, portability, affordability and much more to wrap your head around. Trying to decode all of this is a recipe for burnout. It’s a complex industry and you can save yourself plenty of time and money by getting some professional support.
The mistake
Thinking a broker or mortgage advisor is an unnecessary middleman.
How to avoid it
Lean on expert support. For example, online brokers offer a unique blend of a digital-first journey (no boring phone calls) paired with live chat access to human mortgage experts. They can handle the admin, chase the lenders, and explain the fine print in plain English.
Overlooking support and incentives
8. Leaving free money on the table
The Lifetime ISA (LISA) is arguably the greatest gift to first-time buyers, yet many fail to make the most of it.
The mistake:
Not opening a LISA early enough (it must be open for 12 months before use) or failing to maximise your bonus (up to £1,000 per year, per person from the government for free).
How to avoid it:
If you are a first-time buyer aged 18 to 39, you can open a LISA with even just £1 today to start the clock. That 25% guaranteed boost from the government is difficult to beat with a standard savings account.
9. Dismissing government-backed schemes
Many buyers shy away from Shared Ownership or the First Homes scheme because they seem too complicated. In reality, you can get a mortgage advisor or broker to explain all the ins and outs of these schemes and whether you qualify.
The mistake
Assuming you can’t afford a home or you don’t use all the supports and schemes available because it seems like too much effort to wrap your head around.
How to avoid it
Speak to a broker and find out exactly what support you could qualify for and if it will make your home buying journey simpler and cheaper for you.
Mortgage product and terms
10. Obsessing over interest rates and ignoring fees
With some mortgages, the fees are baked into the interest rate, meaning they’re slightly higher. Whereas with other mortgage deals, the interest rate will be lower because the product or arrangement fees are charged separately.
It’s not always completely obvious which type of deal will actually work out cheaper for you in the long run.
The mistake:
Sorting by the lowest rate on a comparison site and clicking the top result without carrying out proper calculations.
How to avoid it
Always look at the total cost of the mortgage deal. A skilled broker will run all the numbers for you to compare the fee-paying vs. fee-free options based on your specific home loan.
11. Choosing the wrong term length
Standard terms used to be 25 years. Now they can be 30, 35, or even 40-years. Opting for a longer term may seem like a no-brainer because it will mean lower monthly repayments, but this doesn’t tell the full story.
A longer term means you’ll likely be paying much more back in interest to your lender for the life of your mortgage.
The mistake
Choosing a longer mortgage term to get the lowest monthly payment without realising you’ll pay much more in total interest.
How to avoid it
If you can afford a shorter mortgage term, it could be worth it. Or you could use a strategy of a longer term but aim to overpay (providing there are no early repayment charges ERCs). Ensure you approach your mortgage term with a balanced mindset.
Real life: first-time buyer testimonials
"The one thing I wish I had realised is that the first mortgage repayment is normally deferred to the end of month two, but it’s larger than a regular repayment because it covers a month and a bit. This would’ve been useful to know from the beginning. The prospect of that first mortgage payment, after all the costs involved with buying a home, was daunting. When we realised it was actually going to be a month later than we thought, we checked we’d have enough to cover it, and then went and bought a sofa! "
"When we bought our house, we embarrassingly forgot to budget for VAT on some of the costs. Because the seller pays the estate agent fees, that one’s luckily not an issue for first-time buyers and mortgage product fees don’t incur VAT, but the survey and conveyancing can. Just at the point of completion, we had to go cap-in-hand to our parents, which we thought we were past. Worse still, they said No! So those first couple of months were very tight! "
Bottom line
According to Habito, 17% of homebuyers missed out on a house of their choice because someone else could move quicker. You don’t want to let poor preparation or avoidable mistakes prevent you from taking those important first steps on the right path towards buying your dream home.
Frequently asked questions
What are the best mortgage types for first-time buyers in the UK?
For most, a fixed-rate mortgage is popular because it offers a level of certainty as your payments won’t fluctuate for a set period of time.
However, if you want more flexibility or expect interest rates to fall, a tracker mortgage (linked to the Bank of England base rate) might be tempting, though it carries the risk of your payments increasing if rates rise.
How can I best compare mortgage rates and providers online?
Most standard comparison sites can’t give you an accurate result because they use generic inputs and often don’t show deals that are exclusive to mortgage brokers.
The best way is usually to use a free, tech-enabled broker. These platforms compare the whole market in real-time and filter out lenders who likely wouldn’t accept your specific financial profile.
Which government-backed UK mortgage schemes should I consider?
Here are some of the key schemes you might want to consider exploring:
- Lifetime ISA (LISA). For the 25% bonus.
- First Homes Scheme. For a 30 to 50% discount on market value.
- Shared Ownership. If your deposit is small but your income is stable.
- Mortgage Guarantee Scheme. If you only have a 5% deposit.
What is the biggest mistake to avoid when getting a mortgage?
The biggest mistake is misrepresenting your income or expenses. Underwriters are forensic; if they find undisclosed childcare costs or Buy Now Pay Later (BNPL) debts that you didn’t mention, it can lead to an immediate rejection. It’s best to be completely transparent with your adviser from day one.
I find mortgages confusing: where do I start with financial advice?
Start with a low-pressure digital journey. You can use something like Habito’s online quiz and then live chat with an adviser who’ll show you what you could afford. This allows you to ask any questions in a private, comfortable environment without the pressure of an in-person appointment.
Sources
More resources on Finder
More guides on Finder
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Help and advice for first-time buyers getting a mortgage
Want to know how to choose the right mortgage as a first-time buyer? Our guide will give you everything you need to know to find the help and advice you need.
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First-time buyer definition: Who qualifies and who doesn’t?
The definition according to the UK government.