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, for example, a first time buyer is someone who hasn’t had a mortgage in the last three years in the UK and abroad.

And for Kensington, a first time buyer is someone who hasn’t 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.

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 don’t pay stamp duty on the first £145,000 of the purchase price of your home. 

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

Stamp duty in Wales

You don’t pay stamp duty on the first £180,000 of the purchase price of your home. 

There’s no discount for first time buyers.

Read our stamp duty calculator guide to know more about stamp duty for first time buyers.

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.

Step 1. Find out how much you can borrow

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, don’t charge a fee. 

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

Step 2. Get a Mortgage in Principle

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

It’s a statement, usually from a lender, to say that they could lend you a certain amount of money.

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

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

This is so that they can tell the seller that a lender has agreed, in principle, to give you a mortgage.

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

Step 3. Start house hunting

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.

Step 4. Get back in touch with your mortgage broker or lender

When your offer is 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.

Step 5. Find a solicitor

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 don’t know one, ask around. Most people who own a home will have used one.

Your mortgage broker may suggest one, but you don't have to use them.

Step 6. Apply for a mortgage

Your broker will be able to do this for you. You just need to give them certain documents.

These 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.

Step 7. Get a valuation

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 don’t 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.

Step 8. Receive a mortgage offer

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

Step 9. Exchange contracts with the seller

Your solicitor will work with your seller’s solicitor about exchanging 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.

Step 10. Move into your new home

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

Read our home buying guide to 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

These calculations are for guidance only. Talk to a mortgage broker or lender to get a more accurate figure. Your home could be repossessed if you don't keep up repayments on your mortgage.

You could borrow up to:

£000,000
00%
£000,000
Other fees you may have to pay:
(free with Trussle)
(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.

These calculations are for guidance only. Talk to a mortgage broker or lender to get a more accurate figure. Your home could be repossessed if you don't keep up repayments on your mortgage.

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. They range from the big 6, such as Barclays and Nationwide, to smaller lenders, like Virgin Money and Aldermore.

But it’s much more 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 NatWest, for example.

But that doesn’t mean that NatWest will have a great deal for you.

This is because 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

The right deal for you

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 so you can look at lots of different deals 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 large range of deals to choose from and some lenders only offer their mortgages through brokers.

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

A broker will take into account your personal situation and all 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 and let you know if a better rate comes along.

Sometimes it won’t be worth switching to it because you might have to pay a fee if you end your mortgage early. We’ll let you know.

Our best first time buyer deals this week

These deals are based on a:

  • £181,600 mortgage

  • 25 year term

  • £227,000 property

We’ve looked for the best deals based on their true cost.

This includes:

  • capital

  • interest

  • fees

  • cashback

2 year fixed deal

£18,152.60

True cost over initial period

£755.65

Monthly payment

Details

Based on getting a mortgage of £181,600 over a 25 year term. Includes £0 upfront fee. 1.84% initial rate reverts to 3.54% SVR after initial 26 month period, costing £899.89 per month for 274 months. Total amount payable is £282,002.69 including interest and fees. That's a 3.30% APRC. True cost based on a 24 month period. This deal was last updated on 7th April 2020.

5 year fixed deal

£45,801.80

True cost over initial period

£760.03

Monthly payment

Details

Based on getting a mortgage of £181,600 over a 25 year term. Includes £0 upfront fee. 1.89% initial rate reverts to 3.59% SVR after initial 63 month period, costing £886.37 per month for 237 months. Total amount payable is £258,277.92 including interest and fees. That's a 3.10% APRC. True cost based on a 60 month period. This deal was last updated on 7th April 2020.

Types of mortgages for first time buyers

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

But 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 carefully 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

A variable rate mortgage, like a tracker mortgage or a discounted variable rate mortgage, has an interest rate that can change.

This means your repayments can go up or down.

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

Tracker mortgage

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

Discounted variable rate

Discounted variable rate mortgages are linked 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.

To learn more about mortgages see our complete guide to mortgages.

First time buyer deposit

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 minimum deposit of 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 can’t afford your monthly repayments.

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

Why your mortgage is cheaper if you put down a bigger deposit

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 ¹

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

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 the amount you want to save is transferred 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.

First time buyer mortgage no deposit

Most lenders ask for a minimum deposit of 5% of the purchase price.

You could get a mortgage with no deposit, but these are usually linked to a relative’s or friend’s savings account. 

Lenders who offer 100% mortgages include:

With a Barclays Family Springboard Mortgage, for example, you borrow the full purchase price of your home.

Your relative or friend puts 10% into a Helpful Start account for five years.

If you keep up with your repayments for 5 years, your helper gets their deposit back plus interest.

The mortgage then continues.²

First time buyer government schemes

If you’re a first time buyer there are a number of government schemes that could help you buy a home.

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 rather than 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 because of the big difference between the rise of house prices and wages.

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

If your parents are happy to help you buy a home, get some free advice from a mortgage broker about which way could suit you best.

Gifting a deposit

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 showing they have the money.

Loaning a deposit

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

With this type of loan it’s really 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.

Guarantor mortgage

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

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.

Read our credit score guide to find out more.

100% mortgage

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

Joint borrower sole proprietor

With this type of mortgage a family member helps with your payments but they don't own any of your home.

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

Parental/family concessionary purchase mortgage

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.

All mortgage guides, calculators and deals

Sources

¹ Bank of England

² Barclays Family Springboard Mortgage

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

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

You may have to pay an early repayment charge to your existing lender if you remortgage.

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