First-Time Buyer Mortgages: What You Need to Know

Understanding the First-Time Buyer Mortgage UK Landscape

Introduction

Buying your first home is an exciting milestone, but it also comes with a steep learning curve—especially when it comes to securing a mortgage. For first-time buyers in the UK, understanding the mortgage process, eligibility criteria, and the support available can significantly improve your chances of success. From saving a deposit to navigating government schemes and lender requirements, this guide outlines everything you need to know about first-time buyer mortgages in the UK.

Key Mortgage Requirements

To qualify for a first-time buyer mortgage in the UK, lenders will typically assess the following:

• Stable income: Proof of employment or consistent self-employment income
• Credit history: A good credit score improves your chances and borrowing terms
• Affordability: Lenders evaluate whether you can comfortably manage repayments
• Deposit amount: Typically 5–20% of the property’s purchase price

Lenders also apply stress tests to ensure you can afford the mortgage if interest rates rise.

Saving for a Deposit

Saving for a deposit is one of the biggest hurdles for first-time buyers. The minimum deposit is usually 5%, but a larger deposit (10% or more) will often secure better interest rates and wider lender options.

Tips to boost your deposit savings:

• Open a Lifetime ISA (LISA): Offers a 25% government bonus on savings up to £4,000 per year
• Cut discretionary expenses and set a monthly savings goal
• Consider living with family to reduce rental costs while saving

Government Schemes for First-Time Buyers

Several government schemes aim to make homeownership more accessible:

• First Homes Scheme: Offers eligible buyers a 30–50% discount on new-build homes
• Shared Ownership: Allows you to buy a share of a home (usually between 25% and 75%) and pay rent on the rest
• Help to Buy (Wales): Offers equity loans to support new-build purchases
• Lifetime ISA: Can be used towards a deposit for a first home if you’re aged 18–39

Each scheme has its own eligibility criteria, so consult a mortgage adviser to determine which one suits your situation.

Practical Tips / Recommendations

1. Check Your Credit Score Early: Fix any issues and avoid taking out new credit before applying for a mortgage.
2. Use a Mortgage Broker: They can find deals tailored to first-time buyers and guide you through the process.
3. Get a Mortgage in Principle: This gives you an estimate of how much you can borrow and shows estate agents you’re a serious buyer.
4. Consider All Costs: Don’t forget about legal fees, stamp duty (if applicable), and moving costs when budgeting.
5. Explore All Schemes: Use government support where eligible to maximise your deposit and improve affordability.

FAQ Section

1. What is a first-time buyer mortgage?

It’s a mortgage product specifically for people who have never owned a home before. It often includes incentives like lower fees or access to certain government schemes.



2. How much deposit do I need as a first-time buyer in the UK?

Most lenders require at least 5% of the purchase price, though a higher deposit can improve your deal.



3. Can I get a mortgage with bad credit as a first-time buyer?

It’s possible, but your options may be limited, and interest rates may be higher. A broker can help you find suitable lenders.



4. What support is available for first-time buyers?

Schemes like First Homes, Shared Ownership, and the Lifetime ISA can help you get on the property ladder.



5. Should I use a mortgage broker or go directly to a lender?

Using a broker can increase your chances of approval and uncover deals not available directly to the public.

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.