What is a first time buyer

A first time buyer is usually someone who’s never owned a home before either in the UK or abroad.

The property you’re buying also needs to be where you’ll live, not something you’ll rent out or have as a second home.

Some lenders have a different definition of what a first time buyer is. 

For Nationwide, a first time buyer is someone who has not had a mortgage in the last three years in the UK and abroad.

For Kensington, a first time buyer is someone who has not had a mortgage, or owned a property without any loans against it, in the last 12 months.

Speak to a mortgage broker if you’ve owned a home before and want to know if any lenders will treat you as a first time buyer. 

There are lots of good mortgage deals for first time buyers and you might have a wider choice of mortgages.

Buying your first home during the coronavirus pandemic

Coronavirus changes have affected first time buyers.

First-time buyer mortgage applications were down by 35% year-on-year during April.¹

In May the housing market opened up and it's now possible to buy a home.

It is a bit harder to get a mortgage right now because of coronavirus. You should try to have a deposit of at least 10%. If you only have a 5% deposit it will be very hard to find a lender willing to give you a mortgage.

Look at websites such as Zoopla and create a list of homes you're interested in.

Contact the estate agents to make sure that they're still for sale and ask for more details.

These include:

  • if the seller's in a chain

  • how keen they are to sell

  • if they've had any offers

  • service charge, ground rent and how many years you have left on the lease if it's a flat

Ask the estate agents to let you know when you can view the properties you're still interested in.

Viewing properties can still be difficult. Some estate agents are only doing remote viewings. If you visit the property you'll have to follow social distancing rules.

Make sure your budget is still realistic if there have been any changes to your finances.

House prices could drop when the market opens again. So it may be worth considering homes a little over your budget as some sellers will take offers.

Check that you've got a good credit score and improve it if you have not. There are lots of easy things you can do, such as being on the electoral register.

Do some research on what type of first time buyer mortgage would be best for you.

It could be harder to get a mortgage now than before lockdown as some lenders have withdrawn deals.

But the situation is improving. Halifax, for example, has already reintroduced some mortgages for first time buyers.

You should try to have a deposit of at least 10%, so that you can get a 90% LTV (loan to value) mortgage.

If you’re furloughed it’s likely your salary will be less and this may affect your mortgage application.

Many lenders will only consider your furlough pay when working out what you can borrow. This is usually up to 80% of your salary.

You may have started your application before being furloughed. In this case, your lender might reconsider what you can afford with your furloughed pay.

More about coronavirus.

How to buy your first home

Getting your first mortgage is one of the biggest steps to buying your first home.

But there are many other steps, and some of them are quite complicated.

Our homebuying guide tells you the exact process of buying a house, how long it takes and how much it costs.

First time buyer stamp duty

Stamp duty is a land tax. How much you pay depends on how much you pay for your home and where it is.

It’s often the second biggest cost of buying a home after your mortgage.

Stamp duty in England and Northern Ireland

You pay stamp duty on residential properties that cost more than £125,000. 

If you’re a first time buyer, and the purchase price is £500,000 or less, you’ll pay:

  • nothing on the first £300,000

  • 5% on the rest up to £500,000

You pay the normal amount of stamp duty if you pay more than £500,000 for your home.

Stamp duty in Scotland

You do not pay stamp duty on the first £145,000 of the purchase price of your home. 

If you’re a first time buyer, you do not pay stamp duty on the first £175,000. 

Stamp duty in Wales

You do not pay stamp duty on the first £180,000 of the purchase price of your home. 

There’s no discount for first time buyers.

Learn more in our stamp duty guide.

How to get a first time buyer mortgage

There are 10 steps to getting a mortgage. Find out what to do if you're a first time buyer.

Use our first time buyer mortgage calculator below to find out how much you could borrow. You’ll need to put in your salary and deposit.

Then add up the other costs such as legal fees, stamp duty, moving and mortgage broker fees.

Some brokers, like Trussle, do not charge a fee. 

A broker will also give you a more accurate figure of what you could afford. Mortgage calculators only give you a rough number.

A Mortgage in Principle is also known as a Decision or Agreement in Principle.

It’s a statement, usually from a lender or mortgage broker, to say that you may be able to borrow a certain amount of money.

It’s a good idea to tell estate agents you have one so they take you more seriously.

An estate agent is likely to want to see it when you make an offer on a property.

You can get a free Mortgage in Principle from Trussle online in minutes.

Look online to see what homes you can afford and get in touch with the estate agents to arrange some viewings.

Make an offer when you find something that’s right for both you and your budget.

When you get your offer accepted, speak to your mortgage broker or lender.

Either can help you find a mortgage, but a broker has a much bigger choice of deals than a lender.

For example, Trussle works with 90 lenders offering around 12,000 deals.

If you go directly to a lender, they'll only offer their own mortgages.

Once you’ve chosen your mortgage, find a solicitor that deals with buying a home. 

Also known as conveyancers, they take care of the legal side of things.

If you do not know one, ask around. Most people who own a home will have used one.

Your mortgage broker may suggest one, but you do not have to use them.

Your broker can do this for you if you give them the documents they need.

These documents include proof of:

  • ID

  • address

  • income

  • deposit

They’ll also want to see bank statements.

Your broker will then send your application to the lender.

The lender will do a credit check and look at your information and documents.

The lender will do a valuation of the property. This is to check what your house is worth in case they need to sell it if you do not pay your mortgage.

The lender also needs to make sure that your home meets certain rules set out in your mortgage.

Speak to your broker if you’d like a more detailed survey done, such as a homebuyer’s report or a full structural survey.

A mortgage offer confirms that a lender will lend you a certain amount of money to buy the property you’ve chosen.

Your solicitor will work with your seller’s solicitor to exchange contracts and the date you'll get the keys to your new home.

This is known as completion.

Once you know the date you can arrange for help with your move.

Pick up the keys from the estate agent, open the door to your new home and start unpacking.

Learn more about buying your first home.

Learn how to get a mortgage with Eva, a Trussle mortgage adviser

First time buyer mortgage calculator

First time buyer and wondering how much you can afford? Calculate how much you can borrow in the UK with our first time buyer mortgage calculator. Calculate your monthly mortgage repayments when buying your first home.

How much can I borrow?
Mortgage repayment calculator

Your home could be repossessed if you don't keep up repayments on your mortgage.

Talk to a mortgage broker or lender to get a more accurate remortgage savings amount.

You could borrow up to:

£000,000
Loan to value (LTV):
00%
Including your deposit, you could afford a house price up to
£000,000
Other fees you may have to pay:
Broker fee
(free with Trussle)
Additional fees
(learn more)

Next steps

If you're ready to get a mortgage, the next step is to answer a few more questions. Then a Trussle adviser will find the best mortgage deal for you.

Your home could be repossessed if you don't keep up repayments on your mortgage.

Talk to a mortgage broker or lender to get a more accurate remortgage savings amount.

Best mortgages for first time buyers

The best mortgages for first time buyers have a low interest rate and monthly repayments that you can afford.

While looking for the best mortgage you might be wondering who the best mortgage lenders are.

There are about 100 lenders in the UK. These include the big 6, such as Barclays and Nationwide. As well as smaller lenders, like Virgin Money and Aldermore.

It’s important to look for the best deal for your situation, rather than choose a certain lender.

You might know a first time buyer who’s just got a great deal from a lender such as NatWest.

That does not mean that NatWest will have a great deal for you. Your situation could be very different from your friend’s.

Differences could include:

  • the size of your deposit compared to the value of the property (known as loan to value or LTV)

  • how long you intend to stay in the home

  • if you want your monthly payments to stay the same

  • money from your parents or grandparents

  • pay rises, bonuses or inheritances

There are at least 12,000 mortgage deals offered by around 100 lenders in the UK. 

As well as thousands of deals, each mortgage has its own conditions that you’ll need to meet.

It’s a good idea to start with an online mortgage comparison tool. This gives you lots of different deals to look at and find one with monthly repayments you can afford.

If you need help to find the best deal for your situation speak to a mortgage broker.

Brokers have a range of deals to choose from. Some lenders only offer their mortgages through brokers.

Trussle deals with 90 lenders with around 12,000 deals.

A broker considers your personal situation and the different conditions that lenders have.

Then they’ll suggest what they think could be a suitable deal for you and explain why.

At Trussle, once we’ve found you a mortgage, and the property is yours, we’ll check the market every day. We'll then let you know if a better rate comes along.

Sometimes it is not worth switching to it as you might have to pay a fee if you end your mortgage early. We’ll let you know.

Compare our best first time buyer mortgage deals

Compare 12,000 deals from 90 lenders and one of our advisers can check whether you're eligible for the first time buyer deals you find. Your home may be repossessed if you do not keep up repayments on your mortgage.

New mortgage
Remortgage
Your loan to value is 77.27%

Types of mortgages for first time buyers

First time buyers usually take out the same sort of mortgages as everyone else.

Lenders often give first time buyers special deals, such as cashback and fee free mortgages.

If you’re buying a home to live in, the main types of mortgages are: 

  • fixed rate

  • tracker

  • discounted variable rate

Fixed rate mortgage

With a fixed rate mortgage, you know exactly how much you’ll pay every month and for how long.

You can fix your mortgage from 2 to 15 years.

It’s important to think about how long you want to fix your mortgage for.

With a fixed rate mortgage you can often overpay by 10% a year.

If you overpay more than that, or pay back the full amount early, you may have to pay an early repayment charge (ERC). This can be expensive.

Variable rate mortgage

Variable rate mortgages have interest rates that can change. These include tracker mortgage or a discounted variable rate mortgages.

This means your repayments can go up or down.

Usually the rate is higher than the Bank of England’s interest rate.

Tracker mortgage

These follow the Bank of England's interest rate and are often a certain percentage above it.

Discounted variable rate

Discounted variable rate mortgages link to the lender's standard variable rate (SVR).

They have a discounted rate for a certain amount of time, usually between 2 or 5 years.

These mortgages usually have the lowest interest rates and smallest monthly repayments. But your interest rate and monthly repayments can go up or down at any time.

Learn more in our mortgage guide.

Deposits for first time buyers

A deposit is an amount of money that you put towards buying your home.

It means you already own part of your home when you start paying your mortgage.

Most lenders ask for a deposit of at least 5%.

The larger your deposit, the better the interest rate you’ll get.

This is because it’s easier for the lender to sell your house to pay off your loan if you cannot afford your monthly repayments.

Learn more about how much deposit you'll need to get a house.

How to save for a deposit

Step 1

Decide how much of your monthly salary you need to save each month to get the deposit you want.

You may need to buy a little later than you were hoping.

Step 2

Look at your bank statements and make a list of what you spend your salary on.

You’ll be able to see where you can save.

Step 3

Set up a standing order so you can transfer the amount you want to save into a different account on payday. This could be a savings account or an ISA.

Step 4

Stick to your plan of how you’re going to spend less each month.

If you put down a small deposit such as 5% you’ll need to take out what’s known as a high loan to value (LTV) mortgage.

The LTV is the percentage of the total property value that you pay for with your mortgage.

For example, if you have a deposit of £20,000, and you’re buying a home for £200,000, you have a 10% deposit and an LTV of 90%.

LTV mortgages of 90% and over are considered high.

Lots of people do take out mortgages with high LTVs as they have small deposits. 

But high LTV mortgages are more expensive.

For example, on 31 December 2019, the average interest rate for a 5 year fixed rate mortgage was:

  • 3.34% for 95% LTV

  • 1.69% for 75% LTV ²

If you want a cheaper mortgage, it might be better to save for a bigger deposit or buy a cheaper home.

First time buyer government schemes

If you’re a first time buyer you could get help to buy a home using a government scheme.

Lifetime ISA

A Lifetime ISA (LISA) can help you save up for a deposit.

You can save up to £4,000 a year and the government will add 25%, up to £1,000 a year.

You can keep saving until you’re 50.

Read more in our Lifetime ISA guide.

Shared Ownership

With Shared Ownership you buy a share of the property and pay rent on the rest.

Your household income must be less than £60,000.

Help to Buy Equity Loan

If you’ve got a 5% deposit, you can borrow 20% of the remaining balance from the government. This is instead of taking out a 95% mortgage. This is called an equity loan.

This should lower your mortgage repayments.

The interest rate of an equity loan is usually lower than for a mortgage.

Use our homeownership scheme tool to find out which scheme is right for you. 

First time buyer – how parents can help

Many first time buyers get help from their parents to buy a home. This is because of the big difference between the rise of house prices and wages.

There are lots of ways that parents could help you buy a home and some of them offer good rates.³

You can get free advice from a mortgage broker about which could suit you best if your parents are helping you.

Giving a deposit as a gift is a common way for family or a friend to help you.

Your lender would need a ‘gift letter’ from them.

This is a document that says the gift is genuine and that they won’t have a legal interest in your home.

Some lenders also ask for bank statements from your relative or friend to show they have the money.

Another way for a family member to help is to lend you the deposit.

With this type of loan it’s important that everyone understands what you owe and when you’ll pay it back.

That way there’ll be no surprises in the future.

If your deposit is a loan, rather than a gift, it could affect how much you can borrow.

With a guarantor mortgage, your parent or family member pays back the loan if you cannot.

The lender will expect your guarantor to own all their home or a certain amount of it, for example at least 30%.

Your guarantor will also need to have a high enough income to cover:

  • your repayments

  • their repayments 

  • how much they usually spend

They’ll also need a  good credit score to show that they can manage their finances.

More about your credit score.

See our section above on first time buyers with no deposit.

With this type of mortgage a family member helps with your payments but they do not own any of your home.

Owning all your home could get you a first time buyer discount on stamp duty if you live in England, Northern Ireland or Scotland.

This lets a family member sell you their home below the market value.

A lender would want to be sure that you’ll live in it as your main home.

Sources

¹ Trussle internal data, accurate as of 14.05.20

² Bank of England

³ Defaqto: Intergenerational mortgage market grows by 40% in 2 years

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