Fixed-rate vs. adjustable-rate mortgages: which is right for you?
When it comes to securing a mortgage in the UK, one of the most significant decisions you’ll face is whether
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What is a first-time buyer mortgage?
A first-time buyer mortgage is a home loan designed for people purchasing their first property. You’ll usually need a deposit of at least 5% of the property’s value, and the rest will be borrowed and repaid monthly over a term (usually 25–35 years).
Many lenders offer exclusive deals for first-time buyers, including cashback, free valuations, or lower rates.
What criteria determines a first-time buyer?
A first-time buyer refers to any individual who has never held property ownership anywhere including the UK or another country. Both individuals must fulfill the first-time buyer criteria if you buy together to receive the benefits.
The status of first-time buyer does not apply to individuals who inherited property or who co-owned a previous home or currently own a share in a property scheme.
How do I know how much I can borrow?
When you apply for a mortgage, lenders assess how much they’re willing to lend based on a few key factors; mainly your income, outgoings, and credit history. You’ll typically be able to borrow between four and five times your annual income, though this can vary depending on the lender and your circumstances.
It’s important to be realistic about what you can afford. Even if you’re offered a higher amount, make sure the repayments are manageable over the long term. If you’re buying with a partner, your joint income will usually be taken into account, but so will your shared financial commitments, like loans or credit card balances.
What are the different types of mortgages for first-time buyers?
Fixed rate mortgages
Someone who wants stable monthly payments should choose fixed-rate mortgages because their rates are set for a predetermined term like 2, 5, or 10 years.
Tracker mortgages
These move with the Bank of England’s base rate which causes payments to change.
Variable-rate mortgages
The rates for variable-rate mortgages depend on the lender and can change based on market conditions.
Help-to-buy mortgages
These are designed specifically for buyers who participate in the government Help-to-Buy Equity Loan initiative.
What deposit amount must first-time buyers provide?
First-time buyers are required to make a minimum deposit that totals 5% of the property cost. When you put down a deposit of 10% or higher you will likely get better mortgage rates which helps you save money over time.
Which UK government programs provide assistance to first-time buyers?
The UK government provides multiple schemes to support first-time buyers.
Lifetime ISA (LISA): By saving up to £4,000 annually through a Lifetime ISA you will earn a 25% government bonus on your savings.
Help-to-Buy Equity Loan: First-time buyers can take advantage of an interest-free loan for five years which allows them to borrow up to 20% of their property’s value (40% if they are located in London).
Shared Ownership: Purchase a property stake ranging from 25% to 75% while paying rent for the balance of the property.
First Homes Scheme: The First Homes Scheme provides eligible buyers with homes that cost 30-50% less than their market value.
What happens after I get a mortgage offer?
Once you’ve received a mortgage offer, you’re one big step closer to buying your home — but there are still a few more steps to complete. Your solicitor or conveyancer will carry out the necessary legal work, including property searches and handling contracts. They’ll also arrange for the mortgage funds to be transferred on completion day.
During this time, you’ll want to organise things like a home survey (which checks the condition of the property), and make sure your deposit is ready to transfer. You may also want to set up home insurance, which some lenders require before finalising the loan.
The whole process typically takes between 6 to 12 weeks, though this can vary depending on the property, the chain, and any delays. It’s a good idea to stay in regular contact with your solicitor and mortgage broker, if you’re using one, to keep things moving smoothly.
What to consider before applying for a first-time buyer mortgage
Your credit score
Maintain a good credit score by examining your credit report for mistakes and outstanding debts.
Affordability
Determine the maximum realistic borrowing amount for your budget.
Additional costs
Include costs for solicitor services and property surveys along with moving expenses and purchase of furnishings.
Future plans
Evaluate your intended length of residency in the property before applying for a mortgage.
Step onto the property ladder with confidence
Buying your first home is exciting, but it can also feel overwhelming. With so many deals, lenders, and terms to consider, knowing where to start isn't always easy.
At MoneySpider, we make it simple to compare first-time buyer mortgage quotes, quickly, clearly, and securely, so you can focus on finding the perfect place to call home.
What alternative solutions exist for new buyers entering the property market?
Traditional mortgage options may be proving difficult for you so you could look into:
Guarantor Mortgages: The lender benefits from decreased risk through your loan guarantee provided by a family member.
Family Offset Mortgages: Savings from family members help reduce your mortgage balance which results in lower interest charges.
Joint Borrower, Sole Proprietor Mortgages: Parents or guardians provide financial support for the mortgage payments without holding ownership of the property.
Stamp duty for first-time buyers
Before 1 April 2025, first-time buyers in England and Northern Ireland didn’t pay any stamp duty on properties valued up to £425,000. Now, buyers of properties that cost between £300,001 and £500,000 are subject to a 5% stamp duty rate.
Why might my mortgage application be declined?
Common reasons for rejection include:
- Poor credit history or unresolved debts.
- Insufficient income or failing affordability checks.
- The deposit amount is too small to satisfy the lender requirements.
- Discrepancies in your application details.
FAQ
Need more help?
How long does a first-time buyer mortgage application take?
Once you’ve been approved for a mortgage in principle, the average time required to obtain a first-time buyer mortgage can be from two to six weeks, it may take longer depending on both lender procedures and application complexity.
How much deposit do first-time buyers need to start the mortgage process?
First-time buyers should prepare to pay a minimum deposit equal to 5% or 10% of the property value.
Is it possible to secure a mortgage despite having poor credit?
You can obtain a mortgage despite bad credit but expect higher interest rates and fewer choices. Specialist lenders may be able to help.
Is it necessary to hire a solicitor when buying my first home?
A solicitor or conveyancer must be hired to manage the legal aspects of your property acquisition.
What amount should I set aside for additional expenses during my home purchase process?
Set aside 10-15% of the property price on top of your deposit to cover fees and additional expenses.
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