A Guide to First-Time Buyer Mortgages

Mortgages can be daunting if you’re a first-time buyer, but the good news is that help is available. Here you will learn all you need to know about first-time buyer mortgages, including where to turn for advice and how to compare rates for free.

Are there exclusive first-time buyer mortgages?

As a first-time buyer you will generally have access to the same range of mortgages as people who have owned a property before, but some mortgage lenders do offer exclusive rates, deals and incentives for customers who fall into this demographic.

If you are a first-time buyer seeking a mortgage, here are some things to consider: 

• You might qualify for a government scheme, such as First Homes
• You will likely qualify for a discount on stamp duty land tax
• There are mortgage brokers who specialise in first-time buyers

Although specific first-time buyer mortgages are somewhat rare, the bottom line is that some lenders are better equipped than others to cater for borrowers in this category. For instance, not all of them approve applicants who are applying through government schemes, and only some accept borrowers who need family support, such as those using a guarantor.

Who is classed as a first-time buyer?

You are classed as a first-time buyer if you don’t own, or have never previously owned, a home in the UK or overseas. If you have inherited a property from someone else at any point, you will not qualify as a first-time buyer, even if you have never lived in that property.

If you own or have owned a commercial property, such as a cafe or shop, but have never owned a residential home before, you would still be classed as a first-time buyer.

You will not fall into this category if you are buying a property with someone who has previously owned a home (joint mortgage), or if they are buying it for you.

Compare first-time buyer mortgage rates

Mortgage rates for first-time buyers are generally the same as they are for other types of borrower, and will be determined by the amount of deposit you have (the more, the better), the type of mortgage product you choose and the overall strength of your application.

A few lenders do, however, have exclusive deals reserved for customers who fall into this category, and some of them can have slightly lower rates and more flexible criteria.

You can compare first-time buyer mortgage deals for free on Teito, choose one yourself, and access support from one of our brokers if you need some help. Get started below:

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Eligibility requirements

The requirements for a first-time buyer mortgage are as follows:

• Deposit: First-time buyers will need at least 5% of the property’s purchase price to put down as a deposit under most circumstances.
• Credit history: Having clean credit will increase the number of mortgage options at your disposal, but bad credit mortgages are available for first-time homeowners. These are usually offered by specialist lenders and via mortgage brokers.
• Age: It is harder to get a mortgage if you are over 75 or will be turning this age during the term. There are specialist lenders for older borrowers if this is the case.
• Property type: Buying a non-standard construction property - such as one that isn’t made from bricks and mortar - as your first home might mean you need to apply through a specialist lender to increase the number of options available.
• Employment: First-time buyers should seek specialist advice from a broker if they are self-employed with less than two years’ accounts to prove their income.

If you are applying for your mortgage through a government scheme, these have their own eligibility criteria. See the next section for further information on this.

How much can you borrow?

Generally speaking most first-time buyers can borrow a maximum of 4-4.5 times their annual income, but those with a certain amount of income (usually at least £50k per year) or a higher deposit (at least 15-20%) might be able to borrow 5 times salary or higher.

Use our calculator below to get rough idea of your maximum borrowing:

The above calculations are merely ballpark estimates for the average first-time buyer. Speak to one of our mortgage brokers for bespoke calculations and the right advice.

First-time buyer mortgage schemes

The table below shows a range of different government schemes that first-time buyers can apply for to help them get a mortgage, along with the main criteria for each one.

Alternatives to consider

For first-time buyers who don’t qualify for the above schemes, or do not wish to use them, there are alternative ways to get a mortgage if you fall outside of standard criteria.

Guarantor mortgages

These are usually exclusive to first-time buyers and they allow them to get approved for a mortgage with financial support from a family member. Most family members who agree to stand as a guarantor must agree to secure the mortgage against a property they own and hold equity in, or place enough savings into an account held by the lender for security.

Joint borrower sole proprietor mortgages 

These are popular with first-time buyers who would struggle to get a mortgage on their own. They are agreements with multiple applicants named on them, who all take responsibility for the repayments, while only one person is declared as the legal owner of the property.

The most common arrangements see parents named on a mortgage with their child, who is named as the legal owner and sole resident of the property.

Read more about joint borrower sole proprietor mortgages here.

How to get a first-time buyer mortgage

We recommend following the steps below to get a first-time buyer mortgage:

Know your options: Explore all of the available government schemes and whether family support options are available. Sometimes these are the best fit for first-time buyers, but it’s worth exploring what is available outside of schemes too.

Optimise your credit reports: Getting your credit reports into the best possible shape before you apply is advisable. You can download your files for free on Checkmyfile. Flag up any inaccuracies and outdated information as requesting for these to be removed can strengthen your application and increase your options.

Speak to a mortgage broker: We have mortgage brokers on our books who specialise in first-time buyers and they can often access exclusive rates and deals for them - get started here to book a free, no-obligation chat with one of them today.

How we helped a first-time buyer with deposit issues onto the property ladder

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How much stamp duty will you pay?

As a first-time buyer you will benefit from stamp duty relief if the property you are buying has a purchase price of under £625,000. In England and Northern Ireland you will pay no stamp duty on the first £425,000 or the property’s value, compared to £250,000 for other buyers.

For properties valued at up to £625,000, you will pay 5% stamp duty on the proportion between £425,000 and this threshold.

Stamp duty in Scotland is called Land and Building Transaction Tax (LBTT), and first-time buyers pay nothing on the first £175,000 of their property’s purchase price.

In Wales, the equivalent is Land Transaction Tax (LTT) and first-time buyers get no extra relief, but nothing is due on properties under £225,000, regardless of the buyer’s status.

Which lenders offer first-time buyer mortgages?

The following mortgage lenders are known to offer exclusive deals for first-time buyers:

• Nationwide: Deals include 95% mortgages, support for affordable home ownership schemes and the option to borrow up to 20% more via their ‘Helping Hand’ initiative.
• NatWest: Offer mortgages via Mortgage Guarantee scheme and Shared Ownership.
• Barclays: Offer guarantor mortgages through their Family Springboard initiative and affordable options via the Shared Ownership scheme.
• Santander: Deals include 95% mortgages, guarantor mortgages and support for government schemes such as Shared Ownership.

The above is merely a small sample of the lenders available for first-time buyers. You can compare rates and deals from 90+ mortgage providers for free on Teito.

Why choose Teito for your mortgage needs?

At Teito you can compare first-time buyer mortgage rates for free and access support from a broker who specialises in borrowers who fall into this category; people just like you!

Here are some of the reasons people choose Teito for their mortgage needs:

• You can view rates from 90+ mortgage lenders in seconds
• Our brokers specialise in first-time buyers and can access exclusive deals
• We are 5-star rated on leading review websites
• You can secure an agreement in principle in minutes

Ready to compare rates and take advantage of a free, no-obligation chat with a broker who specialises in first-time buyer mortgages? Get started here.