If you're thinking about buying your first home, you'll probably have plenty of questions about mortgages. How does a mortgage work? How much deposit do you need? What credit score is needed to buy a house? And what do lenders actually look at when deciding whether to approve an application?
While the mortgage process can seem complicated at first, understanding the basics can make a big difference. This guide explains everything first-time buyers need to know about mortgages and credit scores, from understanding key mortgage terms to improving your financial readiness before applying.
If you're at the start of your homebuying journey, visit our First-Time Buyers hub for advice, guides and support designed specifically for first-time buyers.
A mortgage is a loan that helps you buy a property. You'll usually pay a deposit towards the purchase price and borrow the remaining amount from a lender, which you'll repay over an agreed period, typically 25 years or more.
The property acts as security for the loan, meaning the lender could repossess it if repayments aren't maintained. For most first-time buyers, a mortgage is the most practical way to buy a home.
Types of mortgages
There are several mortgage options available, including:
How repayments work
Mortgage repayments are usually made monthly and consist of repayment of the amount borrowed, plus interest charged by the lender.
The amount you pay depends on the size of your mortgage, your interest rate, the mortgage term and the type of mortgage you choose
Longer terms can reduce monthly payments but could mean you pay more interest over time.
Deposit – The amount you contribute towards the property purchase.
Loan-to-value (LTV) – The percentage of the property's value you're borrowing.
Interest rate – The cost of borrowing money from the lender.
Mortgage term – The length of time you have to repay the mortgage.
Mortgage in Principle (MIP) – An indication of how much a lender may be willing to lend. Also known as an Agreement in Principle (AIP) and Decision in Principle (DIP).
When getting a mortgage, lenders typically focus on three key areas: affordability, credit history and your deposit.
A credit score is a number that reflects your credit history and helps lenders assess risk when reviewing an application.
Different credit reference agencies use different scoring systems, but they all aim to indicate how reliably you've managed borrowing and repayments.
How your score is calculated
Your score is influenced by several factors. These might include your payment history, electoral roll registration, recent applications and any outstanding debt.
What lenders look for in a credit profile
Lenders look beyond the score itself and might also consider your address history, employment stability, financial commitments and recent borrowing activity.
Each lender has its own lending criteria, which is why outcomes can vary.
There isn't a single credit score needed to buy a house. Mortgage lenders assess applications differently and consider a range of factors alongside your credit history.
In general:
Every first time buyer's path is different. Read our customer stories to see how real Persimmon homeowners saved for their deposit, secured a mortgage, and moved into their first home.
Understanding mortgages doesn't have to be complicated. By learning how mortgages work, understanding the role of credit scores and preparing your finances in advance, you'll be in a stronger position when it's time to apply.
Whether you're just starting your research or actively looking for your first home, we at Persimmon are here to offer guidance and support throughout the process.
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