Buying your first home in Cambridge is exciting, and the mortgage is usually the part that feels most daunting. With local prices sitting well above the national average, getting your borrowing right carries real weight here. Master a few essentials, though, and it stops being a mystery.
Before you fall for a listing, get a firm grip on your finances. Lenders decide how much they will offer based on your income, your regular outgoings and your overall financial reliability, and as a rough guide many will lend around four and a half times your income. Your deposit matters just as much: the more you put down, the better the rates you tend to be offered. Five per cent deposits are possible through the government's mortgage guarantee scheme, but in a market as pricey as Cambridge a larger deposit stretches a good deal further.
An agreement in principle (sometimes called a decision in principle) is a statement from a lender indicating roughly how much they would be willing to lend you. It is not a full mortgage offer, but it is quick to arrange and genuinely useful. It tells you your realistic budget, and it shows estate agents and sellers that you are a serious buyer who can proceed. When homes are competitive, having one ready can be the difference between securing a property and missing out.
Mortgages come in a few broad shapes, and knowing the difference helps you choose what suits you:
Most mortgages today are repayment mortgages, where you pay off both the loan and the interest so you own the home outright at the end of the term.
The deposit and monthly payments are only part of the picture, so plan for the rest too. Chief among the extra costs is Stamp Duty Land Tax. First-time buyers pay nothing on the first £300,000 and 5% on anything between £300,000 and £500,000, with no relief at all above £500,000. Because plenty of Cambridge homes sit above the £300,000 mark, many first-time buyers here should expect a stamp duty bill and set money aside for it. On top of that, allow for a survey, legal and conveyancing fees, any mortgage arrangement fee, and the move itself.
Several schemes are designed to give first-time buyers a leg up, and it is worth knowing which apply to you. The mortgage guarantee scheme supports 95% mortgages, so you can buy with a 5% deposit. A Lifetime ISA adds a 25% government bonus to your savings, up to £1,000 a year, provided the home costs £450,000 or less. Shared ownership lets you buy a share of a property and pay rent on the rest, and the First Homes scheme offers discounts on selected new-build homes. Each has its own eligibility rules, so check which fit your circumstances.
A mortgage is likely the biggest financial commitment you will make, so it pays to have the right people alongside you. A good mortgage broker can search the whole market, explain your options in plain English and find deals you might not reach on your own. Pair that with an estate agent who knows the Cambridge market, and you have the guidance to move quickly and sensibly when the right home appears.
Getting mortgage-ready is mostly a matter of preparation: know your budget, hold an agreement in principle, pick the mortgage type that fits, and set money aside for stamp duty and fees as well as the deposit. Do the groundwork and the rest of the purchase feels far less intimidating. If you are buying your first home in or around Cambridge, come and talk to us — we will help you find your feet before you start viewing.
You can buy with as little as a 5% deposit through the mortgage guarantee scheme, but a larger deposit usually unlocks better rates. With local prices where they are, saving as much as you comfortably can is well worth it.
It is an early indication from a lender of how much they would lend you. It is not a guarantee, but it clarifies your budget and shows sellers you are a serious, ready buyer, so it is worth getting before you start viewing.
Often, yes. First-time buyers pay no stamp duty up to £300,000 and 5% between £300,000 and £500,000. As many Cambridge homes exceed £300,000, plenty of first-time buyers here will have some to pay and should budget for it.
