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First-time buyer mortgages

Compare mortgage rates for your first home with Mojo Mortgages[1]

Who qualifies as a first-time buyer?

You’ll be considered a first-time buyer if you haven’t owned a home before - either in the UK or abroad.

As a first-time buyer, you’ll need to be planning to use the property you’re buying as your main home, and not to rent it out or use it as a second home.

However, even if you’ve never owned a home before, you’re unlikely to qualify as a first-time buyer if:

  • You’re being bought your first home by someone who’s already a homeowner
  • You’ve previously owned a share of a home, for example, if you were a joint tenant
  • You’re buying a home with someone that either owns or previously owned a property
  • You’ve inherited a home, even if you never lived there and you sold it
first time buyer mortgage

Types of mortgages for first-time buyers

When you’re thinking about buying your first home, you’ll need to think about what type of mortgage will suit your needs and circumstances best.

To take out a first-time buyer mortgage your lender will need to assess your salary and other income, and your outgoings, which includes household bills and any credit cards and debts you have.

The main types of first-time buyer mortgages are:

Fixed-rate mortgages

Your monthly repayments will stay the same for a set term - usually two or five years. If the Bank of England’s base rate goes down, you may end up paying more with a fixed rate than with a variable deal. At the end of the term, you’ll be moved to your lender’s standard variable rate which is likely to be higher than your fixed rate was.

Fixed-rate mortgages >

Standard variable rate mortgages (SVRs)

Each lender has an SVR it can set at whatever level it chooses, although it tends to follow the Bank of England’s base rate. If you’re on an SVR you’ll stay on this until your mortgage ends or until you switch to another deal.

Variable rate mortgages >

Tracker rate mortgages

Usually lasting two to five years, these mortgages track the Bank of England’s base rate and have interest rates that are typically set at a certain percentage above or below this rate. This means your payments will change as the base rate changes.

Tracker mortgages >

Discount mortgages

With these mortgages you pay the lender’s SVR with a fixed amount discounted from it. The discount only lasts for a set amount of time, usually two or three years, and these variable rates sometimes have a limit on how much they can rise or fall.

How much can first-time buyers usually borrow?

The amount you can borrow depends on your deposit and your salary. As well as paying your deposit, you should also factor in expenses like stamp duty, legal fees and moving costs.

Use our mortgage calculator to find out how much you could borrow and see what your monthly payments might be.

Mortgage calculator

What government schemes can help first-time buyers?

A number of schemes have been introduced to make buying a home easier and more affordable for first-time buyers, these include:

  • Help to Buy: Equity Loan - Used for newly built homes in England, this scheme can give you a loan of up to 20% to buy a home. You’ll still need a 5% deposit and a 75% mortgage for the rest. The equity loan will be interest-free for the first five years.
  • Help to Buy: Mortgage Guarantee - To help people who can afford mortgage repayments but not large deposits, this UK-wide scheme encourages lenders to provide 95% mortgages by providing them with a government-backed guarantee.
  • Right to Buy - For council and housing association tenants in England, Right to Buy can provide a discount of up to £112,800 on these homes to help first-time buyers take their first step on the property ladder.
  • Shared Ownership - First-time buyers in England can buy a share of a housing association home, initially buying between 10% and 75% and paying rent on the rest. You’ve got the option of increasing your share up to 100% when you can afford to.

Similar schemes to help first-time buyers are also available in Wales and Scotland, while Northern Ireland offers alternative low-cost homeownership options.

What other options are there for first-time buyers?

To make it easier to get on the property ladder, there are some other options that can help you get a mortgage as a first-time buyer:

  • Guarantor mortgages - Parents or other family members use their savings, or their home, as security for the mortgage. Typically they would guarantee 75% or 80%, although it can be up to 100%, which avoids you needing a deposit. If payments aren’t met, the shortfall will be paid by your guarantor or taken from their savings or property.
  • Parental help - Your parents or a family member can provide money for the deposit. This means you’ll have more money to put down on a home as a first-time buyer and can access better mortgage deals and lower repayment costs.
  • Shared or joint ownership - Friends, parents or family members can take out a joint mortgage with the first-time buyer. Combining incomes can increase the size of mortgage you can take out, which can help you access more mortgage deals and spread the cost.

Stamp duty for first-time buyers

If you’re buying a new property or your home costs over a certain amount you’ll need to pay Stamp Duty Land Tax (SDLT).

However, from 1 July 2021, if you’re a first-time buyer you’ll get a discount on SDLT which means you’ll pay less or no tax if both of the following apply:

  • You and anyone you’re buying with are first-time buyers
  • The home you’re buying is £500,000 or less

If you’re a first-time buyer you won’t have to pay SDLT on the first £300,000 of your home’s purchase price and you’ll need to pay 5% for any amount above £300,001 to £500,000.

For homes that cost more than £500,000, you’ll have to pay SDLT at the home mover rate.

To work out how much stamp duty you’ll pay as a first-time buyer you can use the government’s Stamp Duty Land Tax calculator.

The average deposit paid by first-time buyers in May 2019 was £47,646[2] But you can get mortgages with a deposit of 5-10%. Check your eligibility now

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10 top tips for first-time buyers

Buying a home can be daunting, especially if you’re a first-time buyer. But there are lots of things you can do to help you step on to that first rung of the property ladder:

  1. Top up your deposit

    The more deposit you have, the less you’ll need to borrow. Having a bigger deposit can give you a better interest rate, which will also make your monthly repayments cheaper. So topping up your deposit any way that you can, whether by saving extra hard or asking parents to help, can really make a difference.

  2. Improve your credit score

    While having a decent deposit really helps, your credit rating also affects whether a lender will give you a mortgage. There are several things you can do to boost your credit score, these include registering yourself on the electoral roll, checking credit reports and correcting mistakes, and getting into better credit card habits.

  3. Look at government schemes

    Several schemes and Help to Buy options have been introduced to make it easier and more affordable for first-time buyers. These range from creating more 95% mortgages to Shared Ownership schemes, where you can start by buying a smaller share of your home. Check to see what schemes are available in your area.

  4. Consider buying with friends or family

    Joining up with others can increase your buying power and make it easier to buy a first home. Some mortgage lenders will allow up to four people to get a joint mortgage - pooling resources can also help give you access to more mortgage deals and mean you can spread the cost.

  5. Get help from mum or dad

    With house prices going up, saving for a deposit is becoming harder and harder. If your parents can help with the cost - for example, by giving money towards the deposit, agreeing to be a guarantor, or having their income or savings taken into account for your mortgage - it can finally mean you being able to become a homeowner.

  6. Find a conveyancer and get a home survey

    Once you’ve put in an offer on a home, it’s a good idea to get a survey done and choose a solicitor to do the conveyancing (transferring the ownership). While your lender will do their own valuation, getting a homebuyer’s survey before you buy will give you an idea of any structural issues or repairs that need to be done.

  7. Do your research

    When you’re thinking about buying a home and are confident you can afford to buy, you should look more closely at where you hope to live and the type of property you’re likely to be able to afford. Look at the current prices for properties in the area, you may need to widen your search to find homes that will fit your budget and needs.

  8. Be realistic about your repayments

    Remember that although interest rates are currently at an all-time low, this doesn’t mean they won’t rise in the future. So don’t plan on paying the rates you’re being given now for years to come. Instead, really think about what you could afford in the future if rates go up and you need to pay out much more each month.

  9. Get your paperwork ready

    To take out a mortgage there are several documents you’ll need to give to your lender. These are likely to include proof of income (such as the last three months’ pay slips), proof of deposit, and your latest P60 tax form. Check as early as possible what you’ll need to supply, so you can have it all ready in time.

  10. Budget for additional costs

    When you’re buying a house there are several costs involved besides the deposit and the mortgage repayments. You may also need to pay stamp duty, legal, search, and arrangement fees, plus survey fees and the general cost of moving. Unexpected expenses often crop up, so it’s a good idea to set some money aside for them.

Compare mortgages for first-time buyers

When you’re planning to buy a house and apply for a mortgage there are a few things you’ll need to do:

  1. Get an Agreement in Principle (AiP)

    It’s a good idea to get an AiP from a lender to give you an idea of how much you could borrow. And estate agents often ask for one before they’ll let you view properties. Getting an AiP shouldn’t affect your credit score but check with the lender first.

  2. Check your credit reading

    When you apply for a mortgage, you’ll be asked to provide lots of information. But before you do this, check your credit information is correct - you can do this online with one of the main credit rating agencies.

  3. Supply your documents

    Once you’ve found a home to buy and had an offer accepted, you’re at the stage of applying for a mortgage.

  4. Compare mortgages

    Shopping around could save you thousands of pounds over the term of a mortgage. We can help you compare mortgages to help you find the best deals and interest rates available across a range of lenders.

  5. Check your mortgage offer and make sure your deposit is available

    Once you receive the lender’s formal offer, make sure you check and fully understand the terms of the mortgage. You’ll also need to look into the arrangements for transferring and paying the deposit once the contracts are exchanged.

Mortgage calculators

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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[2]UK Finance: Mortgage Trends Update May 2019.
Average size of loan taken out by first-time buyers = £166,977.
Average loan-to-value for first-time buyers = 77.8% therefore average deposit = 22.2%
Based on these figures, average first time buyer purchase price = 166.977/77.8 x 100 = £214,623
So, the average deposit paid by first-time buyers in May 2019 is 22.2% of £214,623 = £47,646.