Buying your first home is exciting, but it can also come with a lot of unfamiliar mortgage terminology. From deposits and credit checks to lender criteria and fixed rates, it is easy for first-time buyers to feel overwhelmed before they have even started their property search.
With new schemes always launching, understanding the key terms behind the product is more important than ever. While a lower deposit option could help some buyers take their first step onto the property ladder sooner, there are still important criteria, checks and risks to be aware of.
To help make things clearer, we have broken down some of the key mortgage terms first-time buyers may come across when exploring their options.
The lender’s assessment of whether the buyer can realistically afford the mortgage repayments, based on income, outgoings, debts, and personal circumstances.
A simple valuation for the lender. It is not the same as a full structural survey that would come with a normal valuation.
A property purchased with the intention of renting it out to tenants. For a first-time buyer, this term is especially important as some mortgage products have rules around whether applicants already own other residential properties, including buy-to-let properties.
A check carried out by the lender to look at a buyer’s credit history and help assess whether they meet the lender’s mortgage criteria.
It helps the lender to understand how the buyer has managed borrowing in the past, such as credit cards, loans, overdrafts, car finance, or mobile phone contracts. It may also show things like missed payments, defaults, or other financial commitments.
This is a record of how someone has managed borrowing and repayments in the past. This can include things like credit cards, loans, overdrafts, car finance, mobile phone contracts, missed payments, defaults, and other financial commitments.
This is important for first-time buyers as lenders use it to help assess mortgage eligibility. It gives lenders an idea of how reliably someone has managed credit before, alongside other checks such as income, affordability and lender criteria.
The upfront money a buyer puts towards the purchase of a property before borrowing the rest through a mortgage. For first-time buyers, a deposit is one of the biggest barriers to getting onto the property ladder, as it usually needs to be saved before a mortgage application can progress.
The size of the deposit can also affect the mortgage options available, the amount that needs to be borrowed and potentially the monthly repayments.
An individual buying their first home, who has never previously bought a property before. You are still a first-time buyer if you have inherited a property, but not if you have bought it yourself. This distinction is important because some people may assume that any previous connection to a property automatically rules them out.
A mortgage in which the interest rate remains the same for a set period, such as 2, 3, or 5 years. For first-time buyers, this can make monthly payments more predictable during the fixed period, because the interest rate will not change even if wider interest rates go up or down. However, once the fixed period ends, the mortgage will usually move onto the lender’s standard variable rate, unless a new deal is arranged,
Money given to a buyer by someone else, usually family, to help with their deposit. The person giving the money should not expect it to be repaid and should not usually have any ownership rights in the property. However, in some instances, gifted deposits are not allowed.
Money or assets that have been received from someone who has passed away. For first-time buyers, inheritance can be used as a deposit source when purchasing a property, and most banking schemes accept this. Lenders will usually need to verify where the money has come from, so buyers may be asked to provide evidence such as bank statements, solicitor documents, or estate paperwork.
The cost of borrowing money from the lenders, shown as a percentage. It helps to determine how much the borrower will pay each month, alongside the amount borrowed and the mortgage term. A higher interest rate usually means higher monthly repayments, and the same concept applies to lower interest rates, meaning lower monthly payments.
When two or more people apply for a mortgage together. This typically means that the lender assesses each of the applicant’s income, outgoing expenses, credit history, and financial commitments as part of the mortgage application. Applying jointly may affect how much can be borrowed, as more than one income is considered here, but all applicants share the responsibility for the mortgage repayments.
Some first-time buyer schemes actually allow joint applications where even the main applicant is a first-time buyer, even if the other applicant has purchased a property before.
Often referred to as an SVR, it is the interest rate a mortgage usually moves onto when an initial fixed, tracker, or discounted mortgage deal ends.
Unlike a fixed rate, the lender’s standard variable rate can go up or down. This means monthly mortgage repayments could change. SVR’s are often higher than fixed-rate deals, which is why many borrowers review their mortgage before their current deal ends.
For first-time buyers, this is important because a 5-year fixed rate only keeps the interest rate the same for that fixed period. After that, the mortgage may move onto the lender’s standard variable rate unless a new mortgage deal is arranged.
The rules a lender uses to decide whether someone qualifies for a mortgage product. These criteria can include things like income, employment status, affordability, credit history, deposit amount/ source, age, property type, and the value of the property being purchased.
How much someone wants to borrow compared to their income. For example, if an individual earns £40,000 a year, and they want to borrow £200,000, then their loan-to-income ratio would be 5 times their amount. Lenders use this to help assess whether the mortgage amount is reasonable based on the applicant’s earnings. For first-time buyers, this is important to note as even if they have the required deposit, the lender still needs to check if the amount they want to borrow is affordable or not for the individual.
The loan-to-value, also referred to as the LTV, is the percentage of the property’s value that is being borrowed through the mortgage.
For example, if a property costs £200,000, and the buyer borrows £190,000, then the loan-to-value percentage would be 95%. This is because it shows that the buyer is borrowing 95% of the property value and contributing to the remaining 5% as a deposit.
A smaller deposit typically means a higher loan-to-value percentage. Higher loan-to-value percent mortgages can help buyers get onto the property ladder with a smaller upfront deposit, but they may come with different rates, criteria, and risks compared to lower loan-to-value mortgages.
The amount the borrower pays back to the lender each month.
A type of loan used to help you buy a property. Most people do not pay the full price of a home upfront, so they pay a deposit and borrow the rest from a lender, such as a bank or building society. The mortgage is then repaid over an agreed period of time through regular monthly payments.
A mortgage is secured against a property, which means the home acts as security for the loan. If the borrower doesn’t keep up with the mortgage payments, the lender could ultimately repossess the property.
The total length of time the borrower has to repay the mortgage, such as 25 or 30 years.
When the property becomes worth less than the amount still owed on the mortgage. This can be a high risk with a smaller deposit.
A newly constructed property that hasn’t been lived in before.
Money which the buyer has saved themselves. There can be examples where certain schemes will only accept deposits if they are the individuals’ own money, and not money that has been gifted to them.
The main individual named on the mortgage application.
A fee charged by some lenders for taking out a specific mortgage product.
A mortgage where monthly payments gradually repay both the loan and the interest.
When the lender takes back the property, because the borrower has not kept up with mortgage repayments.
A property used as a home, rather than for business or commercial purposes
A scheme where another party contributes towards the purchase, and may have a financial interest in part of the property’s value.
A scheme where the buyer purchases a percentage of a property and pays rent on the remaining share. This product is not available for shared ownership.
A check carried out for the lender to confirm the property’s value and sustainability as security for the mortgage.
Understanding mortgage jargon can make the home-buying process feel less daunting, especially for first-time buyers who are just starting out.
Whilst some schemes may help some eligible buyers explore their options, the right mortgage will always depend on individual circumstances, affordability and lender criteria.
If you are thinking about getting onto the property ladder and would like guidance on your options, the team at EM Financial Services is here to help. Contact us to speak with one of our qualified mortgage advisers.
Your property may be repossessed if you do not keep up repayments on your mortgage. This article is for general information only and does not constitute mortgage advice.
Most buy-to-let mortgages are not regulated by the financial authority conduct.
Edward Mellor Limited is an Appointed Representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority
Approved by The Openwork Partnership on 02/07/2026
