First-Time Buyer Mortgages

For first-time homebuyers, understanding available financing options is essential. See how a broker can help you along the process

Are you hoping to use a scheme?

Home First Time Buyer Mortgages First-Time Buyer Mortgages
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: April 4, 2024

We will outline how to get a mortgage if you’re a first-time buyer, what the best deals are, which schemes you might qualify for and where to go for guidance and support.

Are there any specific mortgages for first-time buyers?

Yes, certain mortgage lenders offer dedicated mortgage packages which may include additional incentives solely for first-time buyers. For example, low deposit mortgages, cash rewards, waived fees or free valuations. 

What about for new-build homes?

There are no specific mortgages designed for first-time buyers who are purchasing a new build, but some lenders and developers offer incentives.

Essentially, as a first-time buyer, you have the same borrowing options as any other buyer. But you may not meet the criteria for the best deals you see advertised as, without equity or significant savings, your loan to value (LTV) is likely to be quite high.

Lenders are also wary of what is known as ‘new build premium’. This is the term given to the fact that some new builds actually lose some value after being sold.

However, if you’re looking to stay in the property for a reasonable length of time, this shouldn’t worry you too much. Particularly as there are some government-backed schemes that can make buying a new build as a first-time buyer the best option for some looking to get on the housing ladder

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Schemes you could apply for

There are a number available, with each one aiming to achieve something slightly different and with a unique set of criteria and conditions, especially around income. They can mean huge savings to those who qualify, who otherwise might not have been in a position to buy a home at all.

These scheme options include:

Shared Ownership

In England, Shared Ownership is for new builds and an existing home (through a shared ownership resale scheme) and allows you to buy a share of between 10% and 75% of property specifically built to be sold under the scheme.

The rest of the property is then owned by a housing association to whom you pay rent.

You will need to have a deposit of at least 5% of the amount you are borrowing on your mortgage. Affordability calculations will factor in the mortgage and rent payments.

Additional shares can be bought as your circumstances allow via a system known as ‘staircasing’.

There is also a Shared Ownership scheme in Wales that lets you buy a 25% and 75% share in a property from an approved landlord provided your annual household income does not exceed £60,000.

First Homes Scheme (England)

This scheme allows you to buy a home with a discount of between 30% to 50%. You must be able to secure a mortgage for the remainder of the cost and the property cannot cost more than £250,000 (£420,000 in London).

Some local authorities prioritise the following for the First Homes Scheme:

  • Key workers
  • Those who already live in the area
  • Those on low incomes

This scheme is only available to borrowers with a combined household income of no more than £80,000 (£90,000 in London)

Right to Buy / Right to Acquire: These are both arrangements for long-term tenants of council or public sector landlords (NHS or armed services, for example) who might want to buy the home they live in, allowing them ownership for the first time via a discount. While Right to Buy and Right to Acquire are similar in their objective, they are subtly different.

Lifetime ISA / Help to Buy ISA: These are products rather than schemes, but come with government backing. In effect they are savings accounts that are enhanced by government top-ups, boosting first-time buyers’ savings by up to 25%. For example, with a Lifetime ISA, you can put £4,000 a year into it and you’ll qualify for a 25% bonus on top of that. A good mortgage broker will be able to advise as to which ISA might help you save towards a deposit.

Co-Ownership (Northern Ireland)

Similar to England’s Shared Ownership, Co-Ownership is only available in Northern Ireland.

Co-Ownership is available for any property in Northern Ireland up to a value of £190,000. You can buy a share of between 50% – 90% and pay rent on the part of the home that you don’t own.

If you’re not quite ready for home ownership yet but expect to buy within three years, you may want to consider Rent to Own which lets you move into a rental property and buy it when the time is right.

New Supply Shared Equity Scheme (Scotland)

Another scheme similar to Shared Ownership, the NSSE Scheme Is only available to buy a new build in Scotland from a housing association or local authority.

You can buy between 60% and 80%, with the rest owned by the Scottish Government.

There is also an Open Market Shared Equity Scheme that enables you to buy a share of a property on the open market and is not restricted to new builds.

Other incentives are available

Aside from the government schemes to help first-time buyers, there are other incentives offered by developers and supported by some lenders:

  • Deposit Unlock: Works in much the same as the Mortgage Guarantee Scheme in that it helps you buy a property with a 5% deposit. However, in this case, the loan is insured by the developer. Participating developers include Bellway and Barratt Homes. Nationwide, Newcastle Building Society and Accord are participating lenders.
  • Builder Deposits: Some developers will pay towards your deposit or other associated costs such as stamp duty or legal fees. Typically, these cash incentives can be worth up to 5% of the purchase price. Some lenders will not accept anything above 5%, while others will not accept this type of deposit at all. Alternatively, developers may offer to contribute towards the costs of items such as white goods as a way of helping you put down a bigger deposit.

How a broker can help first-time buyers choose the right option

A good broker, who has experience of working with first-time buyers and access to the entire marketplace, should be your first port of call when it comes to setting off on the road to homeownership, which is laden with options and challenges.

Impartial and experienced brokers, like the ones we work with, will seek to understand your unique set of circumstances, your financial position, and your hopes for the future. They will then undertake the search for the right lender and deal, assist you with your application and negotiate on your behalf.

The specialist first-time buyer brokers in our network always work with patience and understanding for newcomers to the market, and help to provide clarity, support, expertise and guidance. Contact us today to find out more on 0808 189 2301 or make an online enquiry.

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Other options to consider

A guarantor mortgage is a way for a first-time buyer to be approved by a lender without a hefty deposit or going via a specific scheme, however it does involve a suitable and willing relative to provide collateral. In other words, they will pay your mortgage for you if you can’t.

There are other products too for when family members’ generosity and financial position can help you onto the ladder, including family springboard mortgages and family offset mortgages.

If you are able to find an amendable lender, there’s a chance you could secure a high loan-to-value mortgage, for example a regular 95% mortgage that’s not affiliated to any schemes, or even a 100% no-deposit loan, however you should note that these can be tricky to get hold of in a fluctuating economic situation.

If you’re a first-time buyer on a low income but have a large deposit saved, this might also help. As long as you can prove your affordability to lenders, that down payment will increase your equity and decrease your loan size, which could unlock better rates and be a much cheaper mortgage in the long-term.

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What interest rates to expect

The table below provides an illustration of the typical interest rates available for first-time buyers.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated December 2023

The rates quoted above are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.

Which lenders offer incentives for first-time buyers?

Another hurdle for first-time buyers in a constantly shifting economic climate is that it can be impossible to know which lenders are willing to lend via niche schemes and mortgage products.

For example, guarantor mortgages are only available with a finite number of lenders, including Kent Reliance, Penrith Building Society and Generation Home, and they all come with their own different strict criteria around loan-to-value borrowing caps. Right now there are no mainstream banks accepting applications for guarantor products.

There are more willing lenders on board for shared ownership hopefuls, including bigger names such as Halifax, Barclays, TSB and Santander, and even more still for Right to Buy (NatWest, Virgin Money and Norton Home Loans included).

This is where your broker comes in, as they have insights into the industry and keep up-to-date with trends and shifts.

Speak to a broker who specialises in first-time buyer mortgages

There hasn’t been a time in recent history that has been tougher for first-time buyers to get a foot on the ladder. Rising house prices affect the size of deposit you’ll need, plus increasing monthly repayments caused interest rate hikes can make the challenge seem insurmountable.

Having the backing of a professional broker with experience and knowledge takes the pressure off and provides a better chance of being successful in a tough market. The advisors we work with are impartial, five-star rated, fully trained and happy to get you where you need to be – in your first home. Call us today for a free impartial consultation so we can match you to the right person on 0808 189 2301 or make an online enquiry to get started.

FAQs

It can be tricky but it is possible. Eligibility is stricter and you’ll probably need a larger deposit than a residential mortgage, but there are plenty of lenders out there who accept these kinds of applications. The minimum age restriction is also higher – between 21-25-years-old – and you won’t qualify for a government scheme, so working with a specialist broker in this instance would be vital. Read more about first-time buyer buy-to-let mortgages.

It’s important to know what is included in the sale, what is included in the warranty and when the project is expected to be completed. Also, be sure to find out whether it is freehold or leasehold.

You pay the deposit when you exchange contracts but will not start paying the mortgage until the calendar month after completion. If you’re buying ‘off-plan’ (before construction is complete), a broker will help you avoid paying the deposit but missing out on the property due to delay in completion.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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