First Time Buyer Mortgages

Best mortgages for first-time buyers

A key step in buying your first home is securing a mortgage, and there are many reasons for selecting the most suitable one. While the myriad of financing options available to first-time homebuyers can seem daunting, it can save you a considerable amount of time and money to take the time to research the fundamentals of property financing.

What to consider before you apply for your first mortgage

As a homebuyer, you don’t want anything to jeopardise the chances of buying the home that you’ve chosen. Without applying for a mortgage, many people can’t afford houses, and if you need one, it is necessary to plan so that you’re a good candidate to get a loan:

  • Save a deposit, which is the amount you put towards buying your home.
  • Look at the schemes that assist first buyers in seeing if any fits your needs.
  • Find out how much you can borrow
  • Make sure there is a mortgage you can afford (or qualify for).
  • Find a Property
  • Decide which mortgage type is right for you.
  • Find the right mortgage using our comparison tools for first-time buyers.

How can a mortgage broker help me with a first-time buyer mortgage?

It may seem that getting a mortgage is an overwhelming process, but honestly, it does not have to be. One of the most exciting things ever is buying your first home, so if you want a good broker to do it for you at a fair price, then you should use one. The reason you should use one is quite apparent. After all, if your car broke and you didn’t know anything about cars, you wouldn’t try to repair it yourself, you would take it to a mechanic. For mortgages, it’s the same. Mortgage brokers will save you time, money, and effort, so why not use one? It is free of charge to conduct the initial consultation.

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Compare first-time buyer mortgages

We are here to make it as easy as possible for you to apply for a mortgage. We will ask you how much deposit you have, the home’s cost, and the amount of time you want to pay the mortgage over. Compare mortgages with us. We will then compare the interest rate results from different lenders and give you a list of results, showing the lowest first.

When should I apply for a first-time mortgage?

To get an “Agreement in Principle” should be the first move when applying for a first-time mortgage. While this is not a fixed mortgage contract, it lets you understand what you can afford. You’ll usually find that estate agents want you to have an agreement in principle before you can begin making deals.

In general, some lenders only do a soft credit search when securing an “Agreement in Principle”, ensuring that the credit score will not be affected. They are also commitment-free, meaning that you are under no obligation to take the ‘agreement in principle’ if you change your mind. Clients should always get an agreement in principle before looking for property so they know what value property they can afford to buy.

Call our experts today for more information.

This is when our hard work starts. Once we have found the right deal for you, we will work tirelessly to ensure that all your needs are catered for. We want to make this easy for you, not a challenge.

We have to ensure that we get you the best Mortgage on the market since we are governed by the Financial Conduct Authority (FCA). We have to explain why we suggest the mortgages we make to you and our regulators, so you know exactly why you have the mortgage we have recommended to you.

Know that a mortgage is a long-term investment, and you need to get the right option for you, and there are plenty of different options available.

For more details, call our Mortgage Saving Experts today.

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What mortgages can first-time buyers get?

You can apply for most mortgage types, but some are designed to accept first-time buyers, even if you have a small deposit. You can use our mortgage comparison tool to find a first-time mortgage that offers the best rates and terms for your needs.

Some mortgages are only available for first-time buyers and can come with high LTVs, meaning you would only need a 5% or 10% deposit.

How to find the best mortgage for first-time buyers

The best first-time buyer mortgages, in general, have more favourable rates, fees or even cashback or free valuations.

There are a few options to consider before purchasing your first home, or before you look for the right mortgages for first-time buyers and apply for one.

They include:

  • How much you need to borrow
  • Whether you want a fixed or variable rate mortgage
  • How long you’ll need to pay off the entire balance (the mortgage’s term).

You can use our comparison tools to find the best first-time buyer mortgage for you.

Compare first-time buyer mortgages

Guarantor mortgage

A Guarantor Mortgage enables you to buy a property with a small deposit, and there might even be some deals that are available with an LTV of 100%, meaning you will not need a deposit at all.

A family member or friend will have to agree to be named on the mortgage and to cover your repayments if you miss them. They will have to guarantee the mortgage payments with either:

  • Their own property, which could be repossessed if you fell too far behind on your repayments
  • Their savings, which the lender will hold in a savings account until you have paid off a percentage of your mortgage

Help to buy mortgage

Help to Buy is a government scheme that can help you get a mortgage with a small deposit. They provide equity loans that provide you with the money you will use later to deposit and repay.

They are interest-free for five years and will cover 20% of the purchase price (40% in London). You will need to save a deposit of 5% yourself.

You can find out more about the scheme or compare Help to Buy mortgages to find the right deal here.

Forces Help to Buy scheme

The Forces Help to Buy scheme was introduced in 2014 to help members of the armed forces get on the property ladder. It lets you borrow up to 50% of your salary (with a maximum of £25,000) interest-free to help you buy a home.

Find out more and if you are eligible on the GOV.UK website.

Right to Buy

This helps you to buy a council house if you’ve been living there for over three years. You can get a discount of up to 70% off the price, and instead of a deposit, some mortgage lenders let you use this discount.

Shared Ownership

You can use a Shared Ownership mortgage to buy between 25% and 75% of a property. You can buy further shares in your property until you own all of it.

These mortgages will have much smaller repayments and deposits than if you purchase 100% of the house. However, as well as your mortgage fees, you will also pay rent to the local authority who owns most of your house.

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For more details, call our Mortgage Saving Experts today.

Lifetime ISA

If you’re over 18 but under 40, you can make the most of the Lifetime ISA. This is the first-time home buyer government incentive to help you buy your first home and save for your future.

Under the rules, you can add £4,000 a year into your Lifetime ISA until you’re 50. The government adds a 25% bonus to the money you save, up to a maximum of £1,000 annually.

New build developer loans

Some property developers offer loans if you buy a new house from them. They will often lend you enough for your mortgage’s deposit.

You would need to save up to pay back their loan and make repayments on your mortgage if they lent you 20% of the purchase price for 15 years.

FirstSteps in London

Using the First Steps scheme, you can buy or rent a home in London. They offer a variety of types of property available through the following options:

  • Shared Ownership with a minimum share of 25%
  • Rent to save, which offers a discount on your rent while you save for a deposit
  • Discount full ownership, which offers a discount price on buying a property
  • You can find out more about the scheme, register, and find a property on the First Steps website.

Which type of first-time buyer mortgage rate is best for me?

As a first-time buyer, the best form of mortgage for you depends on your personal circumstances. We’ve put together a summary of the various types of mortgage to help you find the correct fit:

Fixed-rate mortgages

This is when the mortgage interest rate is set for a fixed term, varying from 2-15 years, but most frequently from 2-5 years. A fixed-rate mortgage gives stability so that you can prepare for a set term. You will usually switch to the bank’s standard variable rate mortgage when a fixed-rate period expires, which appears to have a higher interest rate than other products. By converting your current mortgage to a better rate, this is the ideal time to remortgage.

Standard variable rate mortgages (SVRs)

Set at the lender’s basic rate of interest. SVRs don’t come with discounts or reduced interest rates, and the lender can choose to change the rate of interest they charge.

Tracker mortgages

These have variable rates of interest that match an external rate, usually the Bank of England’s base rate. They increase and decrease when the rate they follow increases or decreases and they are set at a rate slightly higher than the rate they track.

Discount rate mortgages

Like tracker mortgages, these track (at a lower level) a lender’s SVR by a set amount, for example, if the SVR is 4% and the discount is 1%, you’ll be charged an interest rate of 3%. But these rates can change, and while the level of discount won’t change, the rate of interest might.

Capped mortgages

These are often related to the SVR of the lender, but the rate will not go over a fixed amount. Similarly, a capped or ‘collared’ mortgage is a form of loan where the interest rate will not fall below a fixed limit. There are a lot less prevalent than other deals.

Offset mortgages

Offset mortgages work by offsetting the money in your bank or savings account with your mortgage. You will have to open a savings and bank account alongside your mortgage when you apply for it and put your savings into that savings account. You do not have to use the bank account if you did not want to, but it would make sense you do. For example, if you have a £100,000 mortgage and £10,000 in savings you will only pay interest on £90,000 worth of mortgage.

This can be more complex than other mortgages, so you should be careful to consider the financial commitment and the effect on your mortgage of any change to your savings (particularly negative changes).

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First Time Buyer Q&As

Can I get a first-time buyer mortgage with bad credit?

A first-time buyer is able to obtain a mortgage with certain types of bad credit, but it just means they will pay a higher interest rate and need a larger deposit, say 15%.

What fees do first-time buyers pay?

Stamp duty is the tax you pay on transactions involving property and land and can be as high as 12%. The figures for first-time buyers are as follows. For properties costing up to £500,000, you won't pay stamp duty on the first £300,000, and you'll pay 5% on the amount between £301,000 and £500,000. Figures correct at 06/05/2021.

Who do we include in your mortgage comparison?

We include mortgages from the whole of the market in the UK. They are all from lenders regulated by the Financial Conduct Authority.

Are 95% of mortgages available to first-time buyers?

95% mortgages are now available to everyone looking to purchase property including first-time buyers.

Can I get a mortgage with someone else?

Yes, getting a joint mortgage means you could borrow more and make the repayments easier to afford.

Does my credit record matter?

Yes, it will show lenders if you can keep up with repayments on a mortgage.

Can I get an interest-only mortgage?

It is improbable that you will be offered an interest-only mortgage as a first-time buyer. Interest-only mortgages are available for people who have large deposits and have higher incomes. A typical size deposit you will need to qualify is around £250,000 and you will need to have around 50% equity or loan to value in order to qualify so not everyone will qualify for them.

What is a good mortgage interest rate for first-time buyers?

A typical rate for someone with a 5% deposit is around 3.09% upwards and someone with a 10% deposit will pay around the 2.85% mark but this all depends on your personal circumstances – rates true at 06/05/2021.

What is loan-to-value?

The average salary in the UK as of early 2015 is around £22,000, while the average house price is more than ten times this at just over £270,000. As you can see, even with a lot of saving involved, it would take an incredibly long time for any of us to have enough cash to buy a house outright. Therefore for most of us, at least in the UK, to buy a property, some kind of loan or mortgage is necessary. The loan-to-value is the ratio between the value of the loan you take out and the value of the property as a whole, expressed as a percentage. The remaining value is paid as a deposit.

How much can I borrow as a first-time homebuyer?

The lender will want to analyse your finances when you apply for a first mortgage. They're going to need to know how much you're making, your monthly outgoings, and the cost of living. How much you will borrow depending on your income and will be worked out by the lender. Usually, a sum of five times your salary would be the total mortgage you'll be given. But it may have been lower than this depending on how much deposit you have. Each mortgage offer is made on an individual basis.

How much deposit do I need as a first-time buyer?

You usually need a deposit of at least 5% to get a mortgage. For example, if a mortgage has an LTV of 95%, you'll need a 5% deposit. On a £150,000 property, this would mean a deposit of £7,500. You'd get a mortgage for the remaining £142,500. You can find 95% mortgages for first home buyers from a wide range of lenders in our comparison tables.

What type of first-time buyer mortgage should I choose?

You can either get a fixed-rate mortgage or a flexible / tracker mortgage if you're buying a house for the first time. The decision depends on how much protection you need for financial security. First-time mortgage rates for borrowers are influenced by the type of mortgage you select.

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