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First-time buyer mortgages

Compare first-time buyer mortgages

Our broker partner Mojo can help you get a mortgage for your first home

We've partnered with Mojo Mortgages to help you compare first-time buyer mortgage deals with an expert

  • Advisers who can look at mortgage rates from across the market

  • Get an expert-recommended deal

  • They can help you apply when you're ready

What's a first-time buyer classed as?

A first-time buyer is someone who:

  • Has never bought a home before, either in the UK or abroad
  • Has never inherited a home, either in the UK or abroad

While most mortgages aren't specific to first-time buyers, many home ownership schemes (to help you get on the property ladder) are dependent on you being classed as a first-time buyer.

How do first-time buyer mortgages work?

If you're buying your first home, you normally need a mortgage to fund the purchase for you.

You can get your first mortgage by:

  • Saving a big enough deposit - you usually need at least 5% of the property price. You can use our mortgage repayment calculator to find out how much you can borrow.
  • Applying for a mortgage in principle (MIP) - also known as an agreement or decision in principle. You usually need this before you start house-hunting so you can get an idea of what kind of houses you can afford.
  • Making a formal mortgage application - If you talk to our broker partner, Mojo Mortgages, they can apply for your mortgage when you're ready. They can also help you find the best first-time buyer mortgage for your circumstances.

While some lenders have specialist products for first-time buyers, most of the deals that are available to you are also available to current homeowners.

How much deposit do first-time buyers need for a mortgage?

To get a mortgage for your first home, you usually need a deposit of at least 5% of the property value or price (whichever is lower).

But the bigger deposit you can save, normally the lower mortgage rates you get access to, because lenders see you as less of a risk. This and the fact you're borrowing less means you benefit from lower monthly repayments.

Putting more money down when you purchase your first home also means you have a greater equity share in the property. This means you have less chance of going into negative equity (when your home is worth less than what you owe your mortgage provider for it).

The table below shows how much money you need to save to make up different deposit percentages for a £200,000 property.

Deposit percentage Deposit amount

Mojo Mortgages and first-time buyers

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What other costs do I need to consider before buying my first home?

Apart from saving for a deposit, other costs you need to consider before buying your first home include:

  • Stamp Duty - In England and Northern Ireland first-time buyers pay no stamp duty on the first £425,000 of a house worth less than £625,000. In Scotland, there's no stamp duty on the first £175,000 of a first home purchase. In Wales, it's the first £225,000. You can use our stamp duty calculator to work out how much you might need to pay.
  • Surveyor - You can choose to pay for a qualified surveyor to check the condition of your property before you buy. You can choose how detailed you want the survey.
  • Valuation fees - Some mortgage lenders charge a valuation fee to check the property is worth the amount you're looking to borrow.
  • Solicitor fees - You'll need a solicitor to help exchange contracts, register your property with the land registry, pay stamp duty tax and organise the conveyancing.
  • Booking fee - Some lenders charge a booking fee of roughly £100 upfront for applying for one of their mortgages.
  • Arrangement fee - Also known as a completion fee, this is the money you owe to a lender after accepting a mortgage. You can either pay this straight away, or add it onto your mortgage. But remember, if you add it on to your loan, this means you pay more in interest. 

What is a loan to value ratio (LTV)?

Loan-to-value (LTV) is the amount of the property value (or price, whichever is lower) a lender is prepared to offer you.

For example, if the property you want to buy is worth £200,000 and you have a £40,000 deposit, this amounts to 20% of the property value. You'd then need to borrow the remaining 80% (£160,000) which means you'd need an 80% LTV mortgage.

Lower LTV mortgages tend to offer better rates than higher LTV deals. The lowest rates are usually available for 60% mortgages (which require a 40% deposit).

A breakdown of how loan to value is calculated

What type of mortgage is best for first-time buyers?

There are 2 main types of mortgage rates you should know about:

  • A fixed rate mortgage - this type of mortgage locks in the interest rate for a set amount time – the most common deals last for 2 or 5 years. But you can get fixed rate mortgages for 1, 3, 7 or 10 years, or even longer. Your rate remains the same for the duration of the deal so you don't need to worry about your monthly payments increasing for this time. But if interest rates fall, you also won't benefit from a decrease in payments.
  • A variable rate mortgage - This is when the rate is subject to change during your deal period. If rates fall, you could benefit from lower payments during your deal. But you must make sure you can afford higher monthly repayments if rates rise. Lenders can sometimes put floors or caps on a variable rate deal. A floor means your rate never falls below a certain level, while a cap (which tends to be more unusual) means it won't rise above a certain amount.

The main types of variable rate mortgages are:

  • Standard variable rate (SVR) mortgages - You're normally moved on to your lender's SVR once your current fixed or variable deal comes to an end. The SVR is usually higher than other deals available on the market, so many people remortgage to another rate if possible.
  • Discount mortgages - Where the rate is at a set amount below the SVR. For example, if the SVR is 5%, then you could get a discount rate mortgage for 2%. The rate rises and falls with the SVR.
  • Tracker mortgages - The rate is normally set at a certain amount above the Bank of England’s base rate. For example, if the Bank of England base rate was 5.25%, and your deal tracked at 2% above, your resultant rate would be 7.25%. If the base rate increased by 0.5%, then you would end up on a rate of 7.75%. 

What schemes are available to help first-time buyers?

There are a number of schemes available to help you buy your first home, including:

  • Shared Ownership - Allows you to buy a share of your home – between 10% and 75%. You pay rent on the remaining share. You take out a mortgage on the share you want to buy and pay rent on the remaining amount. This means you need to make sure you can afford both the mortgage and the rent costs.
  • First Homes scheme - Only available in England, this scheme allows you to buy a home for 30% to 50% less than its market value. The homes must either be a new build or one that was originally bought as part of the scheme. You must be 18 or older, a first-time buyer, able to get a mortgage for at least half the price of the home and have an annual household income of £80,000 or less (£90,000 in London).
  • Mortgage Guarantee scheme - Aims to increase the number of 95% mortgages available in the market. Through it, the government offers lenders the financial guarantees they need to provide these higher LTV deals for properties up to £600,000. This scheme ends at the end of 2023.
  • Right to Buy - Offers council tenants the chance to purchase the house or flat they are living in, often below market value. This is only available in England (and Northern Ireland, in a slightly different format). Right to Acquire is a similar scheme for housing association tenants.
  • Help to Buy - Only available in Wales, the government provides an equity loan to first-time buyers to assist them with purchasing a property. This is only available for new-build properties and you must provide a deposit worth 5% of the property price. You then get a shared equity loan of up to 20% of the purchase price. You take out a repayment mortgage to cover the remaining amount.
  • Lifetime ISA - Offers a 25% tax-free bonus to savings to help you build a deposit for your first home. You can save a maximum of £4,000 a year (meaning the maximum bonus available is £1,000 per year). You need to have had it for a year before using the money to buy your first home, and it's only available on homes worth up to £450,000. If you don't use the funds for your first home, you can also use them for retirement. But if you withdraw the money for any other reason then you may lose the bonus amount and face penalties on your savings as well.

What else should I consider when getting a mortgage for my first home?

A key thing to consider at the moment is the economy and its impact on the mortgage and housing market.

In order to address rising inflation, the Bank of England base rate has risen several times since December 2021. This has resulted in an increase in interest rates, making borrowing more expensive.

This increase in mortgage rates means monthly repayments are more expensive than they would have been a few years ago. It's worth checking your finances and being absolutely sure you can afford the mortgage you're applying for.

Our partner mortgage broker Mojo, can look across lenders to find you the best possible rate. They'll also take your affordability and financial circumstances into account to help you budget for your first home.

What our expert says

"Buying your first home can be an exciting but stressful experience, so it's important to get as much expert help as you can. Speaking to one of our Mojo mortgage experts can help take the hassle out of the home buying process and get you the right deal for you and your circumstances."

Need more help?

Is it easy to get a mortgage as a first-time buyer?

As long as you fit the eligibility criteria, you should be able to find a lender who'll offer you a mortgage.

If you're struggling to save a big enough deposit or you have a low income, there are a range of first-time buyer schemes designed to help you get on the property ladder.

The expert advisors at Mojo Mortgages can help you find the right mortgage based on your circumstances.

What is a guarantor mortgage?

Guarantor mortgages require another person, usually a friend or family member, to agree to cover the monthly mortgage repayments if you can't.

This may help you get a mortgage you otherwise can't. But it's important to remember that this puts your and their finances at risk if the repayments aren't met.

What is a joint mortgage?

A joint mortgage works in a similar way to a mortgage for 1 person. It means 2 or more people (some lenders allow up to 4) can borrow money from a lender to buy a property together.

This allows you to put down a bigger deposit and borrow more.

Everyone on the mortgage is liable for the debt so it's important to make sure everyone is comfortable making their share of the repayments.

Should I buy a freehold or leasehold for my first home?

A freehold property means you own the building and the land it is on. This is the case for most houses.

If it's a leasehold you own the property but not the land it's on. If it's a flat, for example, you usually own the flat but not the building.

The best option for you depends on your circumstances. There are pros and cons of each and some home ownership schemes, such as Shared Ownership, are only available with leasehold properties.

What’s the difference between repayment and interest-only mortgages?

A repayment mortgage means you pay off the interest and a bit of the loan each month, while an interest-only mortgage means you only pay off the interest.

At the end of a repayment mortgage, you should own your property outright. But at the end of an interest-only mortgage, you still need to repay the money you borrowed from the lender. If you don't have the money available to do so, you may need to sell the house or other assets.

Most residential mortgages (particularly for your first home) are taken out on a repayment basis, with interest-only options being far rarer due to their riskier nature.

But buy-to-let mortgages are more commonly taken out on an interest-only basis. This is because landlords are more comfortable selling the property to cover the loan a the end of the mortgage term, if they need to.

Should I consider a longer term mortgage?

Most full mortgage terms are around 25 to 30 years but you can get longer or shorter terms. The maximum mortgage term offered is normally 40 years.

Stretching your mortgage over a longer term means lower monthly repayments. But it does mean you pay more in interest overall, compared to a shorter term mortgage.

Whether a longer term mortgage is right for you depends on your personal financial situation, and it might be helpful to speak to a broker for advice.

Can I get a first-time buyer mortgage if I’m self employed?

Yes, you may be able to get a mortgage for your first home if you're self employed. Just like an employee, whether a bank or building society lends to you depends on your individual financial circumstances.

There are slightly different requirements in terms of how you evidence your annual income when you're self-employed. The documents needed are normally:

  • 2+ years of certified accounts
  • SA302 forms for the past few years
  • Proof of future contracts (for contractors)
  • Proof of dividend payments or retained profits (if you're a company director)
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Page last reviewed: 29 September 2023

Reviewed by: Claire Flynn


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