First Time Buyer Mortgages Explained
As a first time buyer, you're entering the mortgage market for the first time, which can feel overwhelming. The good news is that many lenders offer products specifically designed for first time buyers, sometimes with preferential rates or reduced fees. While first time buyers won't be remortgaging, understanding your options from the start helps you choose a deal that you'll be happy with when renewal time comes.
First time buyers typically need to save a deposit of at least 5-10% of the property purchase price, though larger deposits unlock better interest rates. Other costs include stamp duty (currently waived for first time buyers on properties up to £425,000), solicitor fees, survey costs, and moving expenses.
Deposit Requirements and 95% Mortgages
While 5% deposit mortgages are available, be aware that rates are significantly higher than those offered at 10%, 15%, or 20% deposit levels. Each threshold typically brings better rates, so saving a little extra can save you money over your mortgage term. The jump from 95% to 90% LTV often makes the biggest difference to available rates.
95% mortgages are offered by many high street lenders including Barclays, HSBC, Nationwide, NatWest, and Santander. The government's mortgage guarantee scheme supports these products by providing lenders with a guarantee against losses, encouraging them to offer high LTV deals at reasonable rates.
Government Schemes for First Time Buyers
Several government initiatives exist to help first time buyers. Shared Ownership allows you to buy a share of a property (typically 25-75%) and pay rent on the remainder. The First Homes scheme offers newly built homes at 30-50% discount to first time buyers. Lifetime ISAs provide a 25% government bonus on savings up to £4,000 per year for buying a first home.
While the Help to Buy equity loan scheme has ended for new applications, those who bought using Help to Buy are now approaching the point where equity loan interest begins, making it an important time to review remortgage options.
Best Lenders for First Time Buyers
Several lenders have strong first time buyer propositions. Nationwide often leads on rates for higher LTV products. Skipton Building Society has introduced innovative 'Track Record' mortgages considering rental payment history for those without traditional deposits. Halifax, NatWest, and HSBC all offer competitive first time buyer ranges with various cashback and fee-free options.
The best lender depends on your specific circumstances - deposit size, income, credit history, and the property you're buying all affect which deals are available. A broker can search the whole market to find the most suitable option.
Get Started on Your First Home
Ready to take the first step? Our FCA-regulated brokers can guide you through the first time buyer mortgage process, explaining your options and finding competitive deals from across the market. Complete our form for free, no-obligation advice tailored to your circumstances.