First time buyer guide
Learn how to get your first mortgage, with expert guidance from Trussle's mortgage advisers
In this guide:
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, rather than somewhere you’ll rent out or have as a second home.
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 there are any lenders who’ll 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
It’s a bit harder for first time buyers to get a mortgage at the moment.
Some lenders have withdrawn certain deals and tightened their lending rules because of the coronavirus pandemic.
You’ll probably need a deposit of at least 10%. If you only have a 5% deposit it will be hard to find a lender willing to give you a mortgage.
There are signs that 95% mortgages are starting to come back onto the market.
Accord Mortgages, part of Yorkshire Building Society, is the first lender to bring back 5% deposit mortgages. You have to be a first time buyer and apply for the mortgage through a broker. You will not be able to get the deal for a flat or new build home.
If you're having trouble getting a mortgage at the moment, one option is to buy a property in a cheaper area.
Use our first time buyer deposit map to find a more affordable area that you'd like to live in.
It’s still possible to view a home even during lockdown. Ask the estate agent what their rules are. You’ll probably need a mask and gloves.
Some agents may send you a video tour before a viewing to make sure you’re still keen to see it after getting a better feel for the place.
It will be very difficult to get a mortgage at the moment if you’re furloughed.
Most lenders are not offering mortgages to people who have been furloughed.
Those that do will only look at your current income (usually 80% of your salary) when considering how much to lend you. They will not consider any extra income you earn such as overtime, commission and bonuses.
Some will ask for a letter from your employer confirming the date when you’ll go back to work.
Speak to a mortgage broker to find out which lenders might be able to help you if you’re furloughed.
How to buy your first home
Buying your first home is really exciting, but it can also be quite stressful.
It’s a huge financial commitment and getting a mortgage is just one of many steps you’ll need to take before you can get your hands on the keys.
Understanding what you need to do – and when – will make it much easier for you.
Find out how to buy a house, how long it takes and how much it costs.
And remember, people buy houses every day and you should get plenty of help from your mortgage broker and solicitor.
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.
To keep the housing market moving, the government introduced a temporary stamp duty holiday in July 2020.
At the moment you do not need to pay any stamp duty if you buy a property for up to £500,000 in England and Northern Ireland.
You must complete your purchase by 30 June 2021 to qualify for the stamp duty holiday.
Completion is when the money has been transferred and you have the keys to your new home.
The government introduced an extension to the previous deadline of March 31 in the spring budget.
From 1 July 2021, you’ll get a discount that means you’ll pay less or no tax if both the following apply:
you, and anyone else you’re buying with, are first-time buyers
the purchase price is £500,000 or less
The stamp duty holiday ended in Scotland on 31 March 2021. It ends in Wales on 30 June 2021.
Read our stamp duty guide to find out more about the stamp duty holiday.
When there is no stamp duty holiday 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.
When there is no stamp duty holiday 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.
When there is no stamp duty holiday 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.
Usually your solicitor or conveyancer deals with stamp duty. They’ll ask you for the money, then pay it to HMRC on completion day.
Completion is when you get the keys to your new home.
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 can give you a more accurate figure of what you could afford. Mortgage calculators only give you a rough idea.
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 know you’re a serious buyer.
An estate agent is likely to want to see it when you make an offer on a property. This is so that they can tell the buyer you’ve got one when they pass on your offer to them.
You can get a free Mortgage in Principle online from Trussle.
Look online to see what homes you can afford and get in touch with the estate agent to arrange some viewings.
Make an offer when you find something that’s right for both you and your budget.
Once a seller has accepted your offer, 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.
Trussle works with 90 lenders offering around 12,000 deals, for example.
If you go directly to a lender, they'll only offer their own mortgages.
While you’re sorting out your mortgage, find either a conveyancing solicitor or a conveyancer to take care of the legal side of buying your home.
A conveyancing solicitor is a qualified lawyer and a conveyancer specialises in property but cannot deal with complex legal issues.
Ask around if you do not know one. Most people who own a home will have used one.
Your mortgage broker or estate agent 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 include proof of:
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.
Learn more about what documents you need.
The lender will do a valuation of the property. This is to check what it’s worth in case they need to sell it if you do not pay your mortgage.
The lender also needs to make sure that your new 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 arrange the date you'll get the keys to your new home.
This is known as completion and is when the money is transferred.
Once you know the date you can arrange for help with your move.
Learn how to get a mortgage with Eva, a Trussle mortgage adviser
How likely you are to get a mortgage
How likely you are to get a mortgage will depend on a number of things, including what you can afford and how you've handled debt in the past.
One of the main things a lender will look at it is whether you can afford to borrow the amount you’re after. Typically, lenders will lend you up to 4.5 times your income.
Bear in mind that what you can afford to pay for your rent is not the same as what you can afford for a mortgage.
This is because lenders have strict rules when it comes to deciding you much you can afford.
As well as checking that you can afford the monthly repayments now, they look at whether you could afford your mortgage if interest rates go up.
You’ll also need a good credit score to get a mortgage. Your credit score reflects how you’ve handled debt and paying your bills on time.
Being on the electoral register will also help your credit score.
You can find out what your credit score is online with a credit reference agency.
The three main ones in the UK are:
Applying for a Mortgage in Principle (MIP) can also tell you how likely you are to get a mortgage.
A MIP is a certificate or statement that a lender or broker can issue. It’s sometimes called an Agreement in Principle or Decision in Principle.
The document says that a lender would 'in principle' lend you a certain amount of money to buy a property.
You usually apply for one before you make a full mortgage application. Estate agents sometimes ask for one before passing on an offer to a seller, as it shows you’ve looked into your finances.
You can get a free mortgage in principle from Trussle.
How to make sure your mortgage application will not be rejected
You can never be certain that your mortgage application will be approved, but there are lots of things you can do to improve your chances.
Make sure you’re registered to vote, also known as being on the electoral roll.
To register to vote you have to be aged 16 or over or 14 or over in Scotland and Wales.
You must also be one of the following:
a British citizen
an Irish or EU citizen living in the UK
a Commonwealth citizen who has permission to enter or stay in the UK, or who does not need permission
a citizen of another country living in Scotland or Wales who has permission to enter or stay in the UK, or who does not need permission
You can register to vote at gov.uk or by filling out a paper form, which you can also find on the government website.
A lender will probably want to see your last three bank statements when deciding whether to lend to you.
So make sure you watch your spending for at least 3 months before you apply for a mortgage.
This means holding back on unnecessary luxuries like a new sofa for your new home, a computer or even an expensive trip to the hairdresser.
Your broker or lender will want to see certain documents, all with the correct dates.
You’ll need the last 3 months of your current account statements showing your income and outgoings.
If you have an app, and are wondering how to download a bank statement, you usually just need to go to the statements and documents section, select a statement then tap the download button.
You’ll need payslips for the last 3 months.
You’ll need a certified copy of either your passport or driving licence. Your lender or mortgage broker will let you know who can certify your copies. You can often get this done at the post office.
Make sure that your ID is still in date.
You can use council tax bills, utility bills and bank statements as proof of your address. They must be dated within the last three months.
Proof of deposit
You’ll need a saving statement or a bank statement as proof of your deposit.
If your deposit is a gift, you’ll need to fill in a ‘Confirmation of Gifted Deposit’ form and provide 3 months of bank statements from the person gifting the deposit.
There are a few more documents you might also be asked for.
These could include proof of:
any additional income, such as bonuses, commission and overtime
income you do not earn, such as maintenance, tax credits and child benefit
evidence of right to reside, such as visas or residency cards
Documents if you’re self employed
If you’re self employed (as a sole trader/Limited Company Director/Partnerships/LLP), you’ll need to provide:
2 to 3 years SA302s
2 to 3 years accounts
Some lenders might also ask you for 3 months’ business bank statements.
There’s no point applying for a mortgage that you cannot afford, so know what your limit is.
One of the best ways to do this is to get a Mortgage in Principle (MIP), also known as a Decision in Principle (DIP).
You can get a free mortgage in principle online from Trussle.
When you apply for a mortgage you’re asking to borrow a huge amount of money and a lender will look at what you currently owe.
So if you have enough savings (apart from what you’ll need for your purchase) you might want to consider clearing your debt.
This will increase your chances of being able to borrow the maximum available to you.
It’s worth thinking about using a broker as they’ll recommend the best possible lender for your situation.
This is really important as different lenders prefer different types of customers. You might be a perfect fit for one while another might turn down your application immediately.
Brokers will also help you with all the paperwork that’s needed.
Some, like Trussle, do not charge a fee for their service.
If you’re self employed tell your accountant you’re thinking of moving up to a year before you apply for a mortgage.
This is so that they make sure that your accounts are tax efficient and show your income to its best advantage.
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.
Your home could be repossessed if you do not 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:
Your home could be repossessed if you do not 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 should take into account more than the just interest rate.
The right mortgage should be based on all these things:
You pay less interest on a mortgage the quicker you pay it off, which is why the remaining balance is so important.
While looking for the best mortgage you might be wondering who the best mortgage lenders are.
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 NatWest, for example.
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. It gives you lots of different deals to consider so you can 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.
When you’re borrowing so much money it’s natural to worry about making an expensive mistake.
And with so many mortgages to choose from, it’s difficult to know which is the right one.
If you think you need some advice, a mortgage broker can help find the right mortgage to suit you and your situation. Some brokers, like Trussle, do not charge a fee.
You can also speak to a financial adviser if you need reassurance or advice.
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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:
discounted variable rate
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.
These follow the Bank of England's interest rate and are often a certain percentage above it.
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.
Normally most lenders ask for a deposit of at least 5%. However, because of coronavirus most lenders will now only accept deposits of at least 10%.
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 pay your monthly repayments.
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, in February 2021, the average interest rate for a 5 year fixed rate mortgage was:
4.37% for 95% LTV
1.8% 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.
Learn more about how much deposit you need to get a house.
First time buyer government schemes
If you’re a first time buyer you could get help to buy a home using a government scheme.
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 our Lifetime ISA guide.
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 or £90,000 if you live in London.
If you’ve got a 5% deposit, you can borrow 20% of the remaining balance from the government (or 40% if you live in London).
This is instead of taking out a 95% mortgage and is called an equity loan.
It should lower your mortgage repayments.
The interest rate of an equity loan is usually lower than for a mortgage.
The 5% deposit mortgage guarantee scheme helps first time buyers and some existing homeowners afford to buy a home with a deposit as small as 5%.
This is also known as a 95% LTV mortgage.
The scheme was announced by the government in the spring budget 2021.
Many high street lenders, including Barclays, NatWest and HSBC, now offer 95% mortgages that use the scheme.
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.
You can get free advice from a mortgage broker about which would 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 will not 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 are not able to.
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:
how much they usually spend
They’ll also need a good credit score to show that they can manage their finances.
If you do not have a deposit, you may be able to get a 100% mortgage with help from your parents.
Read more about 100% mortgages.
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.
Read more about the current stamp duty holiday.
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.
First time buyer buy to let
If you’re a first time buyer you may be able to get a buy to let mortgage.
But it will probably be more difficult to get – and more expensive – than a residential mortgage.
You’ll need a bigger deposit, usually at least 25% of the purchase price compared to the 10% you currently need for a first time buyer residential mortgage.
You’ll also have to pay stamp duty. As a first time buyer you do not qualify for stamp duty relief if you are not going to live in the first property you buy.
Try our stamp duty calculator to see how much you’d have to pay.
Most buy to let mortgages are interest only. This means you just pay the interest each month and none of the loan itself.
You’ll need to have a plan to pay off the loan at the end of your mortgage and the lender will want to know what it is.
It could be:
stocks and shares
the sale of the property
The lender will also want to know how much you’ll be able to get in rent and what your income currently is. You’ll still have to cover your repayments if you do not have any tenants for a period.
If you’re a first time buyer you can let out your property as long as you have permission in writing from your lender.
You need to ask them for ‘consent to let’ and they may charge a small fee to consider it.
Some lenders will agree to you letting out your property depending on the reason and how long you want to rent it out for. You might need to move to another city for a while with your job, for example.
If you have consent to let you will not have to change your mortgage.
But if you want to rent out your property longer term, if you’re moving in with your partner, for example, your lender may well insist that you switch to a buy to let mortgage.
Buy to let mortgages tend to be more expensive than residential mortgages.
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¹ Bank of England