First Time Buyer Mortgages Explained

Mortgage Advice for First Time Buyers

first time buyer mortgage

Mortgages for First Time Buyers UK

mortgage advice

Taking out a mortgage is likely to be the biggest financial commitment you ever make, so it’s important that you are armed with all the information you need about mortgages for first time buyers.

Understandably, one of the greatest concerns for first time buyers is finding the right mortgage and getting their application accepted. When it comes to interest rates, percentages and the wide range of choices available, first time buyer mortgages can be truly terrifying. 

Thankfully, this guide to mortgages for first time buyers will cover everything from how to get a mortgage, different types of mortgage, and how to get your mortgage application accepted.

So, let us introduce this first time buyer mortgages guide, with everything you need to know about getting a mortgage.

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How Can I Get a First Time Buyer Mortgage?

how to get a first time buyer mortgage

Buying your first home should be a really exciting time, so you don’t want a stressful mortgage search to derail it. And, as always, the secret to a smooth house purchase is early preparation. 

So, what do you need to do to get a first time buyer mortgage?

Well, there are a number of things you’ll need to sort out before you can apply for a mortgage, and these include: 

  • Checked your credit rating – you will need a good credit rating score to get a mortgage 
  • Saved up a cash deposit – the more cash you can save to put towards your first house deposit, the less you will need to borrow a mortgage 
  • Talked to a mortgage broker – to get an estimate of how much you can afford to borrow as a mortgage 
  • Have a regular income – you will need to demonstrate to the lender that you can meet these payments comfortably

Once you have all these in place, you can start searching for the right first time buyer mortgage for you and your circumstances.


What Mortgage is Best for First Time Buyers?

mortgages for first time buyers

How much you will pay in monthly mortgage repayments will depend on the size of the loans and the type of mortgage you get. The different types of mortgages available for first time buyers include: 

Fixed Rate Mortgages 

A fixed-rate mortgage will keep your monthly mortgage repayments at a set rate for two, three or five years. Once the deal has ended, it’s usually best to switch mortgages to avoid paying the lender’s standard variable rate (SVR), which is likely to be much higher than your fixed rate deal. 

Tracker Mortgages 

The point of a tracker mortgage is that it tracks the Bank of England base rate. This means that the amount of interest you pay each month could go up or down depending on the base rate. If opting for this mortgage type, it is important that you make sure you could afford your repayments if interest rates rise. 

Discounted Variable-Rate Mortgages 

A discounted, variable-rate mortgage usually lasts for between two and five years and is fixed at a set percentage below the lender’s SVR. However, if the SVR changes, then your mortgage rate will also change. 

Offset Mortgages 

Offset mortgages allow you to use a linked savings account to offset against the amount you owe on your mortgage. So, your savings balance is used to offset the amount you owe in mortgage debt – and you only pay interest on the debt balance. This means that instead of earning interest on your savings, you pay less interest on your mortgage. 

How Much Deposit Do I Need for a First Time Buyer Mortgage?

process of buying a house

Your mortgage deposit is the amount of money you have available to put towards the cost of your first home. The size of your deposit will help determine how much you need to borrow as a mortgage – the more money you save the less you’ll need to borrow from the bank. 

Your level of deposit is expressed as a percentage of your property value. This is important because it represents the level of risk to the mortgage lender. It is usually better to save a larger deposit as this will give you access to more competitive first time buyer mortgage rates. 

So, while it is possible to get a first time home buyer mortgage with just a 5% deposit, it might be better to try to save up more, for example, a 10% or even 15% deposit. 

However, it is crucial to remember that you will also need enough funds to cover the various extra costs associated with moving house, such as property searches, surveys, solicitors fees, removals and furnishing your new home. There could also be stamp duty to pay, depending on the purchase price of the property.

Can First Time Buyers Get a Mortgage with a 5% Deposit?

buying house process

It is possible for first time buyers to get a mortgage with a 5% deposit. However, this is usually backed by the government guarantee scheme and requires you to meet certain criteria to be eligible. 

A 5% mortgage is suited to you if you:

  • Are buying a property that will be your only home 
  • Are applying for a single or joint mortgage 
  • Want to apply for a repayment mortgage
  • Have a deposit of between 5% and 9.99% and are looking for a 95% LTV mortgage 

However, as mentioned above, it is not always the best option to go for the lowest deposit on a mortgage. Sometimes, it is better to try to save more so that you can get better mortgage rates. 

When Should I Apply for a First Time Buyer Mortgage?

mortgage advice

As soon as you’re ready to start viewing properties, it is a good idea to get a mortgage in principle from one or more lenders. This will give you an excellent idea of how much you can expect to borrow. Estate agents are likely to also want to see this to ensure you are serious about buying. 

A mortgage agreement in principle is generally valid for between 30 and 90 days, and is only an estimate of what they will lend you rather than a guaranteed mortgage offer.

How to Boost Your Chance of Getting a First Time Buyer Mortgage

buying a house process

Although trying to get a mortgage for first time buyers might seem fairly impossible with all the different things to consider, there are ways that you can increase the chance of your mortgage application being accepted. 

Improve your credit score 

One of the things mortgage lenders will look at when deciding whether to accept your application is your credit score.

So, if your credit rating isn’t looking that great, there are lots of simple things you can do to give your score a boost. For example, check you are on the electoral roll and close down any credit card accounts you no longer use. 

Stick to the same job 

Most mortgage lenders will want to see that you’ve been with your employer for a certain amount of time before they’ll lend to you.

So, if you’re thinking of switching jobs, it might be a good idea to wait until you’ve got your mortgage in place. Usually, it is best to have been in your existing job for at least 3-6 months before applying. 

Sort out your debts 

If you’re submitting a first time buyer mortgage application, the last thing any prospective lender will want to see is that you owe loads of money on credit cards or have outstanding loans. Therefore, it’s a good idea to sort out any debts you might have to demonstrate that you can manage your money responsibly. 

Buying with someone else can be easier 

Purchasing a property with someone else could boost your chances of securing a decent mortgage, particularly if they have a good credit history and a higher income than you. However, you should remember that this is a big commitment so don’t just do it for the sake of getting a mortgage. 

Don’t keep changing your application 

Once you’ve started your mortgage application, don’t keep messing around with it. If you start changing figures and altering things, it could hold up your property purchase.

First time buyers don’t need to be overwhelmed when it comes to finding the best first time buyer mortgage. Simply read through this guide to mortgages for first time buyers and you will have all the information you need to have your application accepted.

For more information on mortgages, make sure you check out our Remortgage Guide.


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