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First time buyer mortgage

Buying your first home is usually one of the most exciting times of your young adult life, and should be a good experience.

First time buyer mortgages can sometimes be confusing and it can seem like a minefield to find the best deals. You can make the experience more simple and far more enjoyable by speaking to the right people and a mortgage expert.

If you need EXPERT mortgage advice then you can contact our team on 0330 118 8188 or CLICK HERE.

Here are some of the answers to the most common questions that people ask us about getting a first time buyer mortgage.

What is a first time buyer mortgage?

Many people are quite familiar with the term ‘first time buyer’ as it’s fairly common in the housing market.

Technically you would be classed as a first time buyer when:

  • You have never bought or owned a residential property in the UK or overseas
  • Previously you have only ever owned a commercial property that has no residential or living space within it

You might not be considered to be a first time buyer if any of these apply to you:

  • Someone that has owned a property previously or who currently owns a property is buying for you (e.g. a parent or guardian) 
  • You have previously inherited a property (regardless of whether or not you have lived there)
  • Buying a property with someone who has previously owned a property (e.g. buying with your parents)

You can easily check whether you would be classed as a first time buyer by speaking to your mortgage advisor or your bank.

Best mortgages for first time buyers

There are hundreds of mortgage lenders and literally thousands of mortgage deals that are available to first time buyers.

Finding the best mortgage deal for first time buyers can be extremely daunting, especially as a new borrower. Usually there are some incentives and preferential rates that are available to first time buyers. This helps them to get a foot on the property ladder.

There are also several critical things to consider before you take out your first time buyer mortgage, such as:

  • How much deposit do you have? Some mortgage lenders will offer up to 95% loan-to-value (LTV) mortgages, but the rates for these will generally be higher. If you are borrowing less against the value of your property then your rate will be lower usually.
  • What’s your credit scores and credit ratings? Every mortgage will require a credit check which will determine the borrowers credit worthiness. Some lenders will be more flexible towards people with lower credit scores. You will often pay a lower rate if your credit rating is good.
  • Do you want deals with no fees and first time buyer incentives? As a first time buyer you will usually be eligible for certain deals that aren’t available to everyone. This is purely because lenders are looking to bring on new borrowers.
  • What are the best deals for first time buyers? You can also save money by finding the best deal for you based on your circumstances and your requirements. Each lender will offer a different rate and will have different lending criteria.

How does a first time buyer mortgage work?

As a first time buyer, you will generally be a new borrower and won’t have been through a mortgage application before.

It’s important to get the right advice from someone with experience, such as a qualified mortgage advisor. This will usually take a lot of the uncertainty and complexity out of the mortgage application process.

The process of buying your first home is usually fairly similar for most.

10 steps for first time buyers

  • Raise a deposit (usually between 5% and 20% of the value of the property)
  • Search for a property
  • Agree to purchase your new property
  • Find a solicitor and a mortgage advisor
  • Search for the best first time buyer mortgage deals
  • Submit a mortgage application
  • Get an ‘agreement in principle’ for your mortgage 
  • Complete a property survey (or valuation)
  • Solicitors searches and legal process
  • Exchange contracts and complete sale

How to get a first time buyer mortgage?

There are a few different ways that you can find and apply for a first time buyer mortgage. Each has its own Pros and Cons.

1. Get advice from a mortgage broker or advisor

Pros

  • Often more choice and more options available to you
  • You can access exclusive broker rates and deals
  • Able to access deals and rates from your own bank or building society
  • More lenders that will give you a greater chance of acceptance
  • Much less hassle and work than trying to apply direct yourself
  • Able to guide you through the first time buyer process

Cons

  • Mortgage advisors are likely to charge you a fee for their service
  • Might be higher rates than your bank or building society direct

2. Apply for a first time buyer mortgage online

Pros

  • Able to complete everything online at your own convenience
  • Usually lower fees than applying through a mortgage broker
  • Can offer exclusive online deals that aren’t available elsewhere

Cons

  • Can be difficult to complete and especially with no previous experience
  • May also be a higher rate than via a broker or through your bank
  • Higher chance of failure to complete or decline
  • Not suitable for complex cases (e.g. self-employed, poor credit etc.)
  • Can be time consuming and difficult to complete process yourself

3. Direct via your own bank or building society

Pros

  • Can be easier for evidence of banking and payment history
  • You might have a good relationship with your bank or building society
  • Potentially more trust in your bank that you deal with
  • May have access to direct deals and rates that aren’t available elsewhere

Cons

  • Options will be more limited than the whole of market route
  • More chance of decline or issues with lending criteria
  • Assistance may be limited and could take more time to complete
  • Not always easy to contact your own bank or building society
  • Limited options for specialist lending (e.g. self-employed or poor credit)

First time buyer mortgages government scheme

There are also a number of government schemes and incentives that are often available to first time buyers.

These schemes can often change and may be limited. It is worth checking to see what deals are available at the time you’re buying. Most government schemes have a limited fund available to them which means that the scheme will end when the pot of money has gone.

The most recent first time buyer mortgages government scheme was ‘The government first home scheme’ that was launched in June 2021. This scheme offers a government lender guarantee to encourage banks and building society to lend.

These schemes may vary from time to time so you should check with us to find out more about what is available currently.

95 mortgages for first time buyers

One of the most popular types of mortgage for first time buyers is a 95% mortgage. This simply means that your deposit required is only 5% of the property value.

These deals are often available only to first time buyers and can be extremely attractive where it is difficult to raise money for a deposit. There are also government scheme for first time buyers that can provide help or support for building a deposit.

The most difficult thing about buying a new house is saving enough money to buy your first home.

For more information on 95% mortgages for first time buyers CLICK HERE.

What are the costs of buying your first home?

There are many reasons why people often struggle with raising enough money to buy their first home and affordability.

Some of the most common expenses that you’ll need to prepare for are:

  • House deposit (Min. 5% of the value of the property)
  • Solicitors fees
  • Mortgage fees
  • Valuation fees
  • Local searches
  • Removal costs
  • Renovation and home improvements (if required)

There are also sometimes other hidden costs that might come up for some more specialist property purchases, depending on the house that you are buying.

Buy to let mortgage first time buyer

There are also situations where you might be considering purchasing a buy to let property and classed as a first time buyer.

It’s important to find out whether your lender will accept first time buyer buy to let applications first of all. Not all lenders will allow first time buyers to purchase a buy to let property due to the increased risks of not having owned a property before.

You shouldn’t have a problem getting a buy to let mortgage as a first time buyer, but the rules will be different to residential lending.

The deposit requirements for buy to let mortgages are very different to residential mortgages so you should also check this. Most lenders will require a minimum of 25% deposit which is much higher than first time buyer residential mortgages.

For more information on buy to let mortgages CLICK HERE.

How long does a first time buyer mortgage take?

You should find that a first time buyer mortgage will take a similar amount of time to process as a standard purchase.

Most property purchases will take a number of months to complete due to the complex legal requirements. The potential chain (number of properties being bought and sold) and the lender requirements also have an effect.

Some of the most common issues with first time buyer mortgages are:

  • Obtaining credit information
  • Proof of identification
  • Proof of residency
  • Income and expenditure verification
  • Additional requirements (e.g. accountant reference etc.)

Each lender will have their own requirements and criteria for lending which can mean that you may need to provide different information. You should also be aware that some lenders will have longer processing times than others, which your mortgage advisor should be aware of.

Useful resources

Gov.uk – First Homes scheme: discounts for first time buyers

ownyourownhome.gov.uk – Help to own your own home

Gov.uk – Lifetime ISA

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