The Complete UK Homebuyer Guide (2025)

Buying a home is one of the biggest financial decisions most people will ever make — but navigating the UK mortgage market can be confusing, especially with changing interest rates, lender criteria and new government schemes. This guide breaks down everything you need to know as a buyer in 2025, covering deposits, affordability, documentation, mortgage types and the full step-by-step process.

At NexGen Finance, our role is to provide clear information and introduce you to FCA-authorised advisers who can recommend suitable mortgage products based on your circumstances.

1. How Much Deposit Do You Need?

Your deposit influences which lenders you can access and what interest rates you qualify for.

Typical deposit requirements:

• 5% deposit – minimum required for most first-time buyer products
• 10% deposit – wider choice, lower rates
• 15%–20% deposit – best rates, reduced monthly payments

Your deposit + your income determine your borrowing power. A larger deposit gives more flexibility and stronger affordability outcomes.

2. How Much Can You Borrow?

Most lenders calculate borrowing using a multiple of your income — but this varies based on your credit profile, debts and monthly outgoings.

Typical lending multiples in 2025:

• 4× income – standard
• 4.49× income – if affordability is strong
• 5× income – limited cases, good credit & strong income

Lenders also assess:

• Credit card balances
• Loans, car finance, BNPL (Klarna, Clearpay, etc.)
• Childcare costs
• Dependants
• Pension contributions
• Higher commuting costs

If self-employed, lenders consider income differently — usually averaging 1–2 years of accounts, SA302s or operating profit.

3. Types of Mortgages Explained

The right mortgage depends on your income stability, risk level, deposit and long-term plans.

Fixed-Rate Mortgages

Your interest rate stays the same for the chosen term (2, 3, 5 or 10 years). Ideal for budgeting and payment stability.

Tracker Mortgages

The rate moves in line with the Bank of England base rate. Useful if you expect rates to drop in the near future.

Variable & Discounted Variable

Rates can move up or down depending on the lender’s internal rate. More flexible but less predictable.

Offset Mortgages

Use your savings to reduce your interest. Popular for higher earners or those with irregular income.

4. Understanding Loan-to-Value (LTV)

LTV is your mortgage amount divided by the value of the property.

• 95% LTV – 5% deposit
• 90% LTV – 10% deposit
• 75% LTV – common for remortgages or larger deposits

Lower LTV = lower risk to lenders = better rates.

5. Fees and Costs Buyers Often Forget

• Solicitor fees and searches
• Survey or valuation report
• Product fee (sometimes worth paying for a lower rate)
• Stamp duty (if applicable)
• Moving costs
• Broker or introducer fee (depends on provider)

6. The Full Step-by-Step Buying Process

Step 1 — Initial Budgeting

Check deposit, income, affordability and credit profile to establish your price range.

Step 2 — Agreement in Principle (AIP)

A soft-check from a lender showing how much you can borrow. Essential before viewing homes.

Step 3 — Viewings & Offers

Estate agents take your offer more seriously with an AIP ready.

Step 4 — Full Mortgage Application

Submit documents — payslips, bank statements, ID, address proof or self-employed accounts.

Step 5 — Valuation

Lender checks the property is worth the purchase price.

Step 6 — Mortgage Offer

Once approved, the formal offer is issued to you and your solicitor.

Step 7 — Conveyancing & Legal Work

Solicitors handle searches, contracts, enquiries and legal checks.

Step 8 — Exchange & Completion

Contracts are exchanged; completion happens once funds are released. You receive the keys.

7. What Documents Do You Need?

• Proof of ID
• Proof of address
• 3 months’ bank statements
• 3 months’ payslips
• P60 (if applicable)
• For self-employed: SA302s, Tax Year Overviews or company accounts

8. Common Issues Buyers Face in 2025

Credit Issues

Missed payments, high utilisation or thin credit files can limit options — but specialist lenders exist.

Affordability Tightening

Lenders are more cautious with spending patterns, BNPL and large monthly commitments.

Property Condition

Some properties require additional checks (e.g., old wiring, damp, structural issues) which lenders may highlight.

9. Government Schemes & Support (2025)

• 95% mortgages – available with participating lenders
• Shared ownership – buy part-rent part-own
• First Homes scheme – discounted new-builds for local buyers
• Deposit assistance – family help via gifted deposits or joint borrower/sole proprietor

10. When to Remortgage Instead of Moving

With rising property costs, many homeowners choose to remortgage to:

• Lower monthly payments
• Switch from a variable rate
• Release equity for home improvements
• Consolidate unsecured debts (specialist lenders only)

11. When Long-Term Fixed Rates Make Sense

10-year fixes offer stability for buyers planning to stay put long-term, but come with early repayment charge risks. Shorter fixes offer more flexibility.

12. Should You Use a Mortgage Adviser?

Mortgage advisers have access to lenders you cannot go to directly and can simplify complex affordability cases. NexGen Finance works as an introducer and connects you with authorised advisers who can recommend suitable products.

Thinking About Buying in 2025?

Whether you’re a first-time buyer, home mover or looking to remortgage, we can help you understand your options clearly and connect you with fully regulated advisers.

Contact NexGen Finance for clear, straightforward guidance tailored to your plans.