First-Time Buyer Mortgages

Many lenders offer first-time buyer mortgages with deposits as low as 5% of the property's value. This can be especially beneficial for those who may not have significant savings.

First-time buyers can access several affordable home ownership schemes such as Help to Buy, Shared Ownership, and Lifetime ISAs. These programmes provide financial assistance through equity loans, shared ownership options, and savings boosts of up to 25%.

This agreement from a mortgage provider indicates how much they might be willing to lend you based on your financial situation. It’s a useful tool when you start looking for properties, as it shows sellers and estate agents that you're a serious buyer.

Some lenders offer more flexible criteria for first-time buyers, considering factors like future earning potential, especially for young professionals.

In England and Northern Ireland, first-time buyers do not pay Stamp Duty on properties up to £425,000. A reduced rate applies for properties above this threshold, significantly lowering the initial purchase costs.

Many lenders offer exclusive deals to first-time buyers, including cashback offers, reduced fees, and lower interest rates, lowering the overall cost of borrowing.

Some lenders offer higher loan-to-value (LTV) ratios or allow parents to act as guarantors, increasing the borrowing capacity of first-time buyers and enabling them to purchase higher-value properties.

Successfully managing a first-time buyer mortgage can help build a strong credit history, which can benefit future financial transactions and borrowing.

• Stability: Fixed-rate mortgages offer a set interest rate for a specified period, usually 2, 3, 5, or 10 years. This provides predictability in your monthly payments, making it easier to budget.
• Certainty: This option is ideal if you want to avoid the risk of interest rate fluctuations and prefer knowing exactly how much your monthly mortgage payments will be.
• Long-term planning: This option is suitable for those who plan to stay in their property for a long period and want financial stability.

• Variable rates: Tracker mortgages follow the Bank of England base rate plus a set percentage, meaning your payments can go up or down depending on interest rate changes.
• Potential savings: This type of mortgage is great if you believe interest rates will stay low or decrease, as this can reduce your monthly payments.
• Flexibility: More suited for those who are comfortable with some level of uncertainty and potential rate changes.

• Linking savings and mortgage: Offset mortgages link your savings account to your mortgage. The balance in your savings account is offset against the amount you owe on your mortgage, reducing the interest charged.
• Tax efficiency: Interest earned on savings is tax-free as it reduces mortgage interest.
• Flexibility: This option is ideal for those with substantial savings who want to reduce their mortgage interest and potentially pay off their mortgage faster.

• Support from family: With a guarantor mortgage, a family member or close friend guarantees the mortgage, typically using their own property or savings as collateral.
• Increased borrowing power: The guarantor's backing allows you to borrow more or secure a mortgage with a smaller deposit.
• Risks for guarantor: The guarantor is responsible if you fail to make payments, so it’s a significant commitment for them.

• Government support: The Help to Buy equity loan scheme allows you to borrow up to 20% (40% in London) of the property’s value from the government, with no interest for the first five years.
• Lower deposit: You only need a 5% deposit and a 75% mortgage to make up the rest.
• New builds: Available only on new-build properties, making it ideal if you prefer a brand-new home.

• Lower initial payments: You pay only the interest on the mortgage each month, making initial payments lower than repayment mortgages.
• Repayment strategy: You need a clear plan to repay the mortgage capital at the end of the term, as the full loan amount will still be owed.
• Suitable for certain buyers: Often used by buy-to-let investors, but can be considered by first-time buyers with a strong repayment strategy.

Lenders typically allow you to borrow up to 4.5 times your annual income - for example, if you earn £30,000 per year, you might be able to borrow up to £135,000. This can vary depending on the lender and your overall financial situation.

Joint mortgage application

If you are applying for a mortgage with a partner, lenders will consider both incomes, potentially increasing the total amount you can borrow.

During the application process, lenders conduct affordability checks to determine how much you can realistically afford to repay each month, considering your lifestyle and spending habits.

Lenders will assess your regular outgoings, including existing debts, utilities, childcare costs, and other financial commitments, to ensure you can afford your mortgage repayments. They use this information to calculate your debt-to-income ratio, ideally below a certain threshold.

Lenders prefer borrowers with stable employment and a steady income. Long-term employment in the same industry or with the same employer can positively influence your mortgage application.

If you're self-employed, lenders typically require additional documentation, such as tax returns and business accounts, to assess your income stability and reliability.

Other costs such as stamp duty land tax, legal fees, survey costs, and moving expenses need to be considered, as well as the deposit. It’s important to budget for these to avoid any surprises.

Improving your credit score before applying can increase your chances of getting a favourable mortgage rate. You can do this by paying off existing debts, avoiding new credit applications, and ensuring all bills are paid on time.

Ensure you can comfortably afford the monthly repayments, even if interest rates rise. Use our mortgage calculator to estimate your repayments based on different scenarios.

Most mortgage lenders require you to have building insurance in place as a condition of the loan. This means that their investment is protected as it covers the cost of repairing or rebuilding your home if it is damaged by events such as fire, flooding, or subsidence.