First-time buyer mortgages
Getting a first-time buyer mortgage doesn’t need to be painful if you plan well. Here are the key facts on first-time mortgages, to help if you’re looking to buy your first home.
How to get a mortgage as a first-time buyer
1. Find out how much you can borrow
When looking for the best first-time buyer mortgage, start by working out how much money you have for a deposit, then find out how much you can borrow. You can get an initial idea by using our mortgage calculator.
Once you know what size of mortgage you could get, you can adjust the deposit amount, property value, mortgage length and interest rate. That can help you see what your monthly repayments could be for different first-time buyer mortgages in the UK.
2. Apply for a mortgage agreement in principle
It’s a good idea to do this before looking at properties. An agreement in principle isn’t a guaranteed mortgage offer, but it gives you a good idea of what you could afford to borrow for your first home.
Getting an agreement in principle involves a soft credit check, so your credit score won’t be affected. And it’s commitment-free, which means you don’t need to take the mortgage if you change your mind.
An agreement in principle is usually valid for 60 to 90 days. If you run out of time, you can reapply with the same mortgage lender or try a new one.
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3. Make a formal application for a mortgage
Once you’ve had an offer accepted on a house, you can make a formal application for a mortgage. The provider will assess your application and your finances to confirm how much they can lend you.
This will typically involve an affordability review and a hard credit check. The mortgage provider will look at your salary and other income, as well as your outgoings. Plus, they’ll check your credit history to find out whether you’re a reliable borrower.
You can expect a final decision on your mortgage application in two to six weeks.
Did you know?
In 2022, the Bank of England (BoE) scrapped mortgage ‘stress test’ requirements to check that you could afford your mortgage if rates increased by 3%.
Although the stress test was removed, responsible lending rules from the FCA (Financial Conduct Authority) still exist. So if your mortgage isn’t fixed for at least five years, lenders still test affordability against a higher interest rate.
What is a first-time buyer?
You’re a first-time buyer if:
- You’ve never owned, inherited or been gifted a residential property or land in the UK or abroad, no matter how much it is worth.
You’re not a first-time buyer if:
- You’re buying a property with someone who owns, or has previously owned, a home
- You’ve inherited a home, even if you never lived there and it’s since been sold
- You buy a part share of a property from someone else and you now both jointly own the property
- Someone who already owns their own home, like a parent or guardian, is buying a property for you.
Always check with your mortgage lender if you’re not sure whether you qualify as a first-time home buyer.
How much deposit does a first-time buyer need?
Generally, a first-time buyer is expected to put down a deposit of at least 10% of a property’s purchase price.
It’s possible to have only a 5% deposit and get a 95% mortgage. But there are risks in having to borrow such a large amount.
The more you can save for a mortgage deposit, the more equity (or ownership) you’ll have in your first home. You’ll then be in a better position to get lower mortgage rates, which might mean cheaper monthly payments.
The table shows how much you’d need to save for a deposit on a £280,000 home.
| Cost of property | Deposit percentage | How much needed |
| £280,000 | 5% | £14,000 |
| £280,000 | 10% | £28,000 |
| £280,000 | 15% | £42,000 |
If you have only a small deposit, you run the risk of going into negative equity if house prices go down (just like after the financial crash of 2008). Negative equity means that you can’t sell your home for as much as the mortgage you took out to buy it.
For example, say you bought your home for £250,000 and took out a 95% mortgage of £230,000. If your home is now valued at £200,000, you’ll be in negative equity. That means you’ll owe the lender money if you sell your house – which is a risk for both you and the lender.
Being in negative equity makes it difficult to move or remortgage.
Which type of first-time buyer mortgage is best for me?
The best first-time buyer mortgage for you depends on your personal circumstances.
Here’s a breakdown of the different types of mortgages for first-time buyers.
Fixed-rate mortgages
The interest rate on your mortgage is fixed for an agreed time – anywhere between two to 15 years, but most commonly between two and five years. A fixed-rate mortgage offers stability, allowing you to budget for a set period.
When a fixed-rate mortgage ends, you’ll normally move to the bank’s standard variable rate (SVR) mortgage if you don’t switch to a better deal.
Standard variable rate mortgages
Set at the lender’s basic rate of interest. Standard variable rate mortgages don’t come with discounts or reduced interest rates, and the lender can choose to change the rate of interest they charge. That means your monthly repayments can be hard to predict.
Tracker mortgages
Variable rate mortgages that go up or down in line with the Bank of England (BoE) base rate. Tracker mortgages are typically set at a certain percentage above the BoE bank rate.
They can be a good option for first-time buyers if interest rates are low. But if interest rates go up, then your monthly payments will go up. You need to be sure that you can afford any increase, should this happen.
Discount rate mortgages
Discount rate mortgages track a lender’s SVR, at a lower level, by a set amount. For example, if the SVR is 7% and the discount is 1%, you’ll be charged an interest rate of 6%. While the level of discount won’t change, the rate of interest can.
Capped mortgages
These are variable rate mortgages linked to a lender’s SVR, but with a fixed upper limit. That means no matter how much interest rates rise, your payments won’t go above that limit. Capped mortgages may not be as commonly available as other mortgage types.
Offset mortgages
Available if you have a savings account and mortgage with the same provider. An offset mortgage allows you to use your savings to reduce the interest you pay on your mortgage.
Search for our best first-time buyer mortgage rates to see what could be available to you. Start a first-time buyer mortgage comparison now.
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How much can I borrow with my first-time buyer mortgage?
The mortgage provider will work out how much you can realistically afford to pay back each month. They’ll give you a mortgage limit based on the information you provide and your financial circumstances. They’ll look at:
- Your credit rating and history
- Your salary, along with any additional income
- Your outgoings
- How much deposit you have.
As a first-time home buyer, you’ll also need to consider how an increase in interest rates might affect your ability to pay back your mortgage. Only borrow what you can realistically afford to repay, ideally leaving you with money left over for savings or unexpected expenses.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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Which schemes are available to help first-time buyers?
The government supports a range of schemes for first-time buyers.
- Lifetime ISA – if you’re aged between 18 and 40, the government could add a 25% boost to your savings (up to a maximum boost of £1,000 per year) until you’re 50. But there are limits on the maximum value of a property you can buy.
- Right to buy – also known as ‘right to acquire’, this gives tenants who rent from their local council the chance to buy the home they live in at a discount.
- First Homes scheme – available to first-time buyers over 18 years old, this scheme offers new-build homes for 30-50% less than their market value.
- Shared ownership – allows you to co-own a property with a landlord (typically a council or housing association).
- Mortgage guarantee scheme – offers the chance to get a mortgage with a 5% deposit. The scheme runs until 30 June 2025.
Compare first-time buyer mortgages
We compare mortgages from some of the market’s leading financial providers. Search for our best first-time buyer mortgage rates and see what you could afford to borrow for your first home.
Start comparisonIf you prefer to speak to someone about your options, we’ve partnered with London & Country Mortgages Ltd (L&C)** to provide you with fee-free mortgage advice. Get in touch with one of their advisors here.
Go to L&C mortgages
About London & Country Mortgages Ltd (L&C)
**London & Country Mortgages Ltd (L&C) is a multi-award winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).
L&C is not a part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria.
L&C will not charge you a broker fee should you decide to proceed with a mortgage.
What our expert says...
“It’s often worth waiting until you’ve built up your credit history to apply for a first-time buyer mortgage. If you don’t have a proven track record of repaying loans and paying bills on time, mortgage providers might be unwilling to lend to you. That’s because they can’t be confident you’ll pay them back. And make sure you’re registered on the electoral roll, as lenders like to see proof of your address.”
- The Editorial Team, Experts in personal finance, insurance and utilities
Frequently asked questions
What is a guarantor mortgage?
With a guarantor mortgage, a close family member or friend agrees to cover the mortgage repayments if you can’t.
A guarantor must be a homeowner and be prepared to put their own home at risk if your mortgage repayments aren’t paid.
Guarantor mortgages can be useful if you have little or no deposit, or you’re struggling to find a suitable lender.
What is shared ownership?
The government’s Shared Ownership scheme lets you buy a share of a property owned by a housing association or local council. You could buy a share of between 10 to 75% of an eligible home’s full market value. You then pay rent on the remaining share of your home.
You could be entitled to join a shared ownership scheme if your household earns less than £80,000 a year (£90,000 if living in London) and you’re a first-time buyer.
What is a joint mortgage?
A joint mortgage is a mortgage you take out with someone else. This could be a family member, friend, husband or wife, or partner.
Both people are responsible for a joint mortgage. That means you’ll both be liable for any missed repayments or making up the balance if one of you is unable to pay.
What is a loan to value ratio (LTV)?
A loan to value (LTV) ratio is the amount you can borrow on a mortgage compared to the overall cost of a property. It’s usually shown as a percentage.
For example, let’s say you’re looking to buy a property worth £200,000 and the lender is only willing to lend you 90% of the property’s value. That means you could be offered a mortgage of £180,000 and you’ll need a deposit of £20,000.
Should I buy a freehold or leasehold for my first home?
It’s up to you whether you buy a freehold or leasehold property.
Freehold means you own the property and the land it sits on. If you buy a house, it will usually be freehold.
With a leasehold, you own the property (but not the land it’s on) for the length of the lease agreement. Most flats and maisonettes are leasehold, and you’ll have to pay fees including ground rent and service charges.
Read more on the pros and cons in our guide to freehold versus leasehold properties.
What other costs are there to consider when buying a first home?
Costs and fees to consider include:
- Stamp duty – first-time buyers in England and Northern Ireland don’t pay stamp duty on the first £425,000 of properties costing £625,000 or less.
- Arrangement fee – this is a fee you pay to take out a mortgage.
- Valuation fee – your mortgage provider will carry out a valuation of the property. Valuation fees vary among providers.
- Survey fees – the cost of surveys varies, depending on the level of detail you want.
- Broker fees – if you go through a mortgage broker, you may need to pay them a fee. We’re partnered with London & Country Mortgages Ltd (L&C)** to provide fee-free advice.
- Legal costs – find out more about the legal expenses relating to a property’s sale in our guide to conveyancing.
What’s the difference between repayment and interest-only mortgages?
A repayment mortgage is where you pay back both the capital (the amount you initially borrowed) and the interest with each monthly payment. It means that by the time your mortgage ends, you’ll have paid off the total loan.
With an interest-only mortgage, you only pay the interest on your loan each month and none of the original capital borrowed. At the end of the mortgage term, you still owe the lender the original loan and you’ll need to show how you intend to pay that back.
Interest-only mortgages tend to have strict eligibility criteria so they’re not commonly available to first-time buyers.
Should I consider a longer-term mortgage?
First-time buyers could consider a longer-term mortgage because spreading the cost over a longer period can lower the amount you pay back each month.
The standard length (or term) of a mortgage is 25 years. However, an increasing number of mortgage lenders are offering longer-term mortgages – some up to 35 or even 40 years.
When considering a longer-term mortgage, be aware that while your monthly repayments will be lower, you’ll be paying back a lot more in interest overall.
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