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A Guide to First-Time Buyer Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 29, 2022

Most first-time buyers need all the help they can get when it comes to getting onto the property ladder, but the good news is that there’s plenty of support available.

In our guide to first-time buyer mortgages, we offer a rundown of the kind of help that’s available, including government schemes such as Help to Buy, flexible mortgage lenders and dedicated mortgage brokers who specialise in the first-time buyer market.

Is it more difficult to get a mortgage if you’re a first-time buyer?

Generally speaking, it isn’t necessarily more difficult to get a mortgage as a first-time buyer if you meet the mortgage lender’s eligibility criteria and have enough deposit, but some mortgage lenders prefer second-steppers and home-movers as they see them as lower risk.

People who have no track record of paying a mortgage might be seen as more of a gamble than somebody with a property to sell with plenty of equity with it, but there is support out there for first-time buyers to help level the playing field.

There are government schemes including Help to Buy and the mortgage guarantee scheme for people with low deposits, specialist mortgage products such as guarantor mortgages, and mortgage brokers who specialise in first-time buyers and fully understand their needs.

We work with mortgage advisors who help first-time buyers every day. They know exactly which government schemes and exclusive deals you should consider and have the right knowledge and experience to help you get the best interest rate possible.

The most important things to remember

  1. Don’t be pushed around – With the market as it is, and houses not selling anywhere near as much as they used to, estate agents and house vendors are all the more eager to sell at the moment. You shouldn’t let anything or anyone make you feel like there is any pressure to make this important decision straight away. Being prepared and acquiring knowledge will help put you in the best position when the right house comes along and getting the right mortgage adviser will ensure that things move quickly once your offer on the house has been accepted.
  2. First time buyers are a commodity – As you’ll have no house to sell you are already in the ‘one up’ position. Speed is a big attraction for someone struggling to sell their house so remember this and use it to your advantage as a bargaining tool when submitting your offer – You have a deposit, no house to sell, and are ready to go!
  3. What to look for in a mortgage broker… The whole market – The right broker will be a whole-of-market specialist. This means they have access to all lenders and almost all products on the market, and aren’t tied to any one institution.
  4. No up front fees – You’ll also want to make sure there are no initial charges. Many independent mortgage brokers charge for their time. Find one that only charge once you’ve been accepted and the mortgage has been finalised. We call this a ‘success fee’.
  5. Affordability – When giving first time buyer mortgage advice, your advisor will likely talk to you about your personal financial circumstances and will put forward a recommendation based on what you think you can afford, helping you to think about budgeting correctly. They’ll also know which lenders offer the highest level of borrowing on a mortgage, so if affordability is holding you back or you’re looking for more than you think you can get, get in touch and an advisor can help.
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Exclusive mortgage deals for first-time buyers

These mortgages are designed to offer some help with the cost of getting your first mortgage. They tend to have either a slightly lower rate or are cheaper on fees, for mortgages with smaller deposits (10-20%).

Don’t let anybody fool you though, these aren’t always world-beating deals and often make little impact when you’re searching through the whole market. Remember, first time buyers are usually also free to go for any other mortgage on the market.

Guarantor mortgages

A guarantor is another person (usually family member) that joins you on the application, on the basis that if you don’t pay the mortgage, they have to. They are usually not on the deeds to the property and have no ownership of it, but they will have your mortgage registered to them as a commitment. It is usually assumed the applicant pays the mortgage on their own and the guarantor is there ‘just incase’.

Again, different lenders have different criteria – some ask for either full or partial affordability to be taken into account with a guarantor – some want them to afford the whole loan along with current commitments, others just to afford the shortfall. – Some have limitations on the length of time a guarantor can be on a mortgage, some don’t.

If you’re concerned  about being able to afford the mortgage on your own, or have questions about guarantors on your mortgage application, it’s important to speak to an expert.

Government schemes for first-time buyers

Several government schemes have been put in place to help first-time buyers and certain key government workers obtain mortgages.

These include:

  • Help to buy: For people buying a new or existing property with just 5% deposit. The government adds an equity loan to cover another 20% of the property’s value, and this is interest-free for the first five years of your mortgage agreement.
  • Key worker mortgages: Exclusive rates and deals for teacher mortgages, mortgages for soldiers, mortgages for doctors and other professionals
  • Shared ownership/equity: A co-ownership scheme that lets you buy a portion of a property with a local authority or housing association. You get a mortgage for the percentage you own and pay rent on the rest. Read more in the section below.
  • Right to buy: This is where your local authority or housing association grants you the ability to purchase your rented council house if you’ve lived there for a number of years and satisfied a number of other specific criteria. Read more in our guide to Right to Buy mortgages.
  • The mortgage guarantee scheme: A range of 5% deposit mortgages were reintroduced to the market thanks to the government’s mortgage guarantee scheme. These include exclusive deals for first-time buyers.

Shared Ownership for first-time buyers

Shared ownership mortgages are where you buy a home for say 75% of its value, and pay a developer or housing association rent on the other 25%. You’d need a mortgage on your share, so if the house was worth £100,000, and you bought 75% of it, you’d own £75,000. For this you’d need a mortgage of maximum 95% (£71,250) and put down a minimum 5% deposit (£3,750).

Shared equity

Similar to shared ownership, shared equity mortgages are where a buyer owns a percentage of the property, and then instead of paying rent, takes out a low/0% rate equity loan with the developer (usually), which is repaid slowly over the term.

Bad credit mortgages for first-time buyers

It can be very challenging for first-time buyers with bad credit to secure a mortgage. Often, you’ll have gone to and been declined by high street banks, and will need specialist advice. Mortgage brokers have the experience and the expertise to help you out in a situation like this.

See our page on bad credit mortgages for more information.

Remortgaging a first-time buyer mortgage

When you’re approaching the end of the initial rates period of your first-time buyer mortgage, most experts would advise you to check whether there are better rates available elsewhere. The whole-of-market brokers we work with can search the entire market on your behalf and tell you whether a remortgage is in your best interest.

Perhaps you want to remortgage for home improvements or release equity to invest in another property? The end of an initial rates period is often a good time to consider these things.

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First-time buyer buy-to-let mortgages

With many lenders you will be required to already own a property if you want a buy-to-let mortgage. Some lenders in the market currently do offer buy to lets for first time buyers, but criteria can be strict.

See our complete guide to first-time buyer buy-to-let mortgages for more information.

Speak to a mortgage broker who specialises in first-time home buyers today

If you’re a first-time buyer, it’s important to seek specialist advice before you apply for a mortgage to find out what your options are and make sure you pick the right one.

The brokers we work with arrange mortgages for first-time buyers today and have a strong track record when it comes to saving them time and money.

Make an enquiry and we’ll introduce you to one of them for free! There’s no obligation and there won’t be any marks on your credit report.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in First Time Buyer Mortgages.

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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 OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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