First time buyer mortgages

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Details of the average first-time buyer mortgage over the first half of 2022
Median property value and LTV based on data from Mojo Mortgages from 1 January to 17 July 2022

Can I get a first-time buyer mortgage?

Possibly. If you’ve never owned a home before, you are considered a first-time buyer, which means you can apply for a first-time buyer mortgage.

You are not considered to be a first-time buyer if you’ve ever owned or inherited property - even if you’ve never lived there.

It’s worth bearing in mind that most mortgage deals available to first-time buyers are also available to those who already own a home.

You’ll get a discount on Stamp Duty if you’re a first-time buyer, but if you are buying as a couple and one of you has previously owned a property, the other will forfeit their first-time buyer status. 

There’s good news for commercial property owners, though. If you've owned a shop or restaurant but have never owned a home, you can still be considered a first-time buyer.

Am I a first-time buyer?

You're a first-time buyer if:

  • You don't own a home currently, either in the UK or abroad

  • You haven't previously owned a home, either in the UK or abroad

  • You've only ever owned a commercial property, such as a shop or restaurant

You're not a first-time buyer if:

  • You currently own or have previously owned a home in the UK or abroad

  • You've inherited a property from someone else

  • Someone is buying a property for you, who already owns one.

How to compare first time buyer mortgage deals

Add your details

Tell us about yourself and an adviser will check your mortgage eligibility and affordability.

We'll show you mortgage options based on what you've told us.

Apply via Mojo

Prepare and submit your mortgage application and get support through each step of the process.

Who is Mojo?

Mojo is a free online mortgage broker. We partner with them so you can get all the mortgage support you need in one place.

Mojo will find out about your circumstances, check your eligibility, and search across the whole of market to help you secure the best mortgage for your circumstances.

An expert will be on hand to offer help and advice and you will be supported through each step of your mortgage application.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

How much can I borrow on a first-time buyer mortgage?

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Lenders will generally lend you around three to five times your annual salary. But they also take your affordability into account.

Some of the criteria banks and lenders use to calculate how much you can borrow include:

  • Income

  • Deposit

  • Regular outgoings

  • Debts 

  • Credit history

To increase your borrowing potential, it's a good idea to start spending sensibly and reduce your outgoings three to six months before you apply.

It's also worth finding out what your credit score is. Make sure the information they have is correct and up-to-date - if not, you should look to change this well before you apply for a mortgage.

You can also take steps to improve your credit rating by showing the lender you're comfortable managing debt - a common way to do this is to start using a credit card and making the repayments on time.

You should also join the electoral register if you haven't already, as lenders see this as a sign of reliability.

What schemes are available to help first-time buyers?

Many first-time buyers struggle to save enough to qualify for a mortgage. Fortunately, the UK government has various schemes to help people get onto the property ladder. These include:

Help to Buy

Help to Buy is a first-time home-buyer government scheme in England and Wales that can help you get a mortgage with a 5% deposit. It's only available for new-build properties.

The scheme offers an equity loan, which means you borrow money to use towards your deposit and repay it later.

You must repay the loan when you sell your home, and if the price of your home has risen, some of the increase will also be repayable.

The Help to Buy scheme is coming to an end in March 2023, and property reservations must be made by the end of October 2022 to be eligible. So you'll have to act quickly if you want to take advantage of this scheme.

Compare Help to Buy mortgages to find the right deal for you

Shared ownership

Another government scheme is shared ownership.

This initiative lets you buy between 10% and 75% of a home as a share from a housing association or other organisation and pay rent on the rest.

Shared ownership lets you buy a house with a smaller mortgage and a smaller deposit.

Normally people can "staircase" until the point that they own 100% of the property.

You have the option to buy more of the property later once you can afford it. This process is known as “staircasing”.

Learn more about shared ownership mortgages.

Lifetime ISA

If you're between 18 and 40, you can open a Lifetime ISA (LISA). Under the rules, you can pay £4,000 a year into your LISA until you're 50. The government adds a 25% bonus to the money you save, up to £1,000 annually.

If you withdraw the money for reasons other than your first home or retirement, you’ll pay a withdrawal charge of 25%, which means you’ll forfeit the government bonus plus some on top.

You can use the money from a LISA to buy your first home if you're buying with a mortgage and:

  • The property costs £450,000 or less

  • You have a LISA for at least a year before you buy a property

  • You use a conveyancer or solicitor to act for you in the purchase

How to get the best first-time buyer mortgage rate for you

When comparing first-time buyer mortgages, it's important to understand what the different mortgage types there are and what they mean for your interest rate and monthly repayments. If you're unsure which is best for you, it's worth speaking to a mortgage broker to get expert advice.

Fixed-rate first-time buyer mortgages

With a fixed-rate mortgage, the interest rate is guaranteed to remain the same for a set period, which means your monthly payments remain the same, making it easier to budget.

The downsides are that the payments might be slightly higher than they would with the best variable mortgage and you won’t benefit if interest rates drop.

On the other hand, your repayments won’t increase if interest rates rise.

You can get fix your mortgage for different lengths of time depending on the deal.

Generally two-year fixed-rate mortgages and five-year fixed-rate mortgages are the most popular.

Variable-rate first-time buyer mortgages

With a variable-rate mortgage, the interest rate can change. The monthly repayments are usually cheaper than a fixed deal at first, but the downside is that these could increase during the deal.

There are different types of variable-rate mortgage:

  • Tracker mortgage - the interest rate can go up and down during the initial deal, in line with movements in another financial indicator, normally the Bank of England base rate.

  • Discounted mortgage - the interest rate is usually a set percentage below your lender's standard variable rate (SVR) during the initial deal, which means it can go up and down.

If you’re considering a variable mortgage, make sure you could afford it if rates were to rise.


Offset mortgages

Offset mortgages allow you to use your savings to reduce how much of your mortgage you pay interest on.

When your mortgage repayments are calculated, the total savings are deducted from the capital owed before the interest is added.

The downside is that the savings account typically doesn’t pay any interest on the money you have stashed away.

Your savings account must be held with the same bank or building society you've borrowed from for you to be eligible for an offset mortgage.

You can get both fixed and variable rate offset mortgages.

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How much of a deposit do I need for a first-time buyer mortgage?

When buying a home, the bigger your deposit, the better your interest rate will be.

These days, you need to have a deposit of at least 5% of the property value to get a mortgage. This will result in a 95 loan-to-value (LTV) mortgage, which is the maximum that almost all lenders will accept.

LTV is a measure of the percentage of the property price that you will need to borrow to make the purchase. Generally, the lower the LTV ratio, the better the deals you can access from mortgage lenders.

That's why it's often worth trying to save more than just a 5% deposit if you can.

The table below shows the different deposit amounts required to access different LTV ratios for a £200,000 property.

Loan-to-value ratio (LTV)DepositMortgage loan amount
95%£10,000£190,000
90%£20,000£180,000
85%£30,000£170,000
80%£40,000£160,000
75%£50,000£150,000

Other mortgage options for first-time buyers

If you can’t get a first-time buyer mortgage in your own right, other options that could help you include:

Joint mortgages

Buying a property with someone else will usually mean you’ll be able to raise a larger deposit, and your combined income will be higher than the amount you earn alone.

This can make it easier to get accepted for a mortgage and increase the chances of getting offered a more competitive mortgage rate as your LTV may be lower. 

Guarantor mortgages

Some lenders offer guarantor mortgages, where a friend or family member promises to step in and meet the mortgage repayments if you’re unable to.

The guarantor will have to put up their own property or savings as collateral against your home loan.

Claire Flynnquotation mark
Getting your first home can be tough, especially juggling paperwork with estate agents, solicitors and lenders. Speaking to a free mortgage broker like our partners at Mojo can help make the process easier.
Claire Flynn, Senior Mortgages Editor

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