First-Time Buyer Mortgage Rates

Once you’re happy with your adviser’s recommendation, they’ll go about securing your DIP (Decision in Principle) – which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.

After you’ve secured a DIP (Decision in Principle), you’ll be in a great position to make an offer on a property. Sellers like DIPs. They show you can afford the purchase. What’s more, the fact that you’ve already started preparing for the transaction highlights to them that you’re serious in your intention to buy.

Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your adviser will then submit the fully packaged mortgage application.

The lender will underwrite your application; this basically means they’ll verify that the information you’ve provided is correct and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property you want to buy to make sure there are no significant problems with it.

If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.

After you’ve accepted your mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property. You’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange. You’ll typically need a conveyancing solicitor to help you.

Once everything is in place, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor. It’s at this point that you put down your deposit and are legally bound to buy the property. You’ll lose your deposit if you pull out after exchange. The purchase completes when money is transferred on an agreed-upon date. This is when you get the keys to your new home.

It’ll be a lot harder to get a mortgage as a first time buyer with no credit or a bad credit history unless you have a large deposit. There are ways you can improve your credit score and overall profile though.

It is possible to get an interest-only residential mortgage as a first time buyer, but you must be able to prove how you’ll repay the outstanding mortgage balance at the end of the mortgage term. Lenders typically reserve interest-only deals for higher rate taxpayers and/or those with substantial deposits.

The minimum deposit you need for a mortgage is 5% – 10%. Nowadays, there are a few no deposit mortgages which let you borrow the entire cost of the property’s purchase price and use savings or equity as security. Usually, the more you can put down in deposit, the better the deals available to you.

The minimum deposit required for a mortgage is 5%. However, there are products such as the Family Springboard mortgage and the Family Assist mortgage. With these kinds of products, you can take out a mortgage that’s up to 100% of the property’s purchase price. At the same time, a family member opens a savings account with the lender that’s linked to the mortgage. The family member will then put at least 10% of the purchase price into this savings account as security on the mortgage, thereby essentially providing a deposit. Alternatively, instead of using savings some products allow family members to use equity in their own property as security for the mortgage.

Several lenders offer similar mortgages under different names.

Lenders do offer products at 80% or 90% LTV (loan-to-value) to first time buyers as well as all other homebuyers.   

If you’ve never previously owned a property in the UK or anywhere else in the world, then you can apply for a first time buyer mortgage. It doesn’t matter if you’re buying alone or as a couple, if neither partner has ever bought a home before, you’ll be counted as first time buyers. See the definition of a first time buyer and whether you qualify.

If you’ve inherited property in the past, then you cannot apply for a first time buyer mortgage. Despite the fact you’d be buying a house for the first time, rules state you must never have owned a property before.

However, if you’re a commercial property owner – e.g. you own a shop or restaurant – but never owned a residential property, you’ll still be considered a first time buyer.

To qualify as a first time buyer, you must have never acquired a major interest in a residential property or land in the UK or anywhere else in the world. We explain what it means to be a first time buyer and the benefits in our First Time Buyer’s Guide.

Nowadays, lenders tend to offer their best products to all borrowers, so don’t limit yourself to “first time buyer products” only.

You may find that a lender has a specific product that they only offer to first time buyers, but often you will find that another lender has a very similar alternative that they offer to a wider range of borrowers.

No one lender is the ultimate first time buyer mortgage provider. Lenders offer all kinds of products and rates. What suits you best will depend on your situation and needs. If you’re not sure what you’re looking for, give us a no obligation call and speak to an adviser on 0808 149 4145.

Finding your first mortgage can be a challenging experience, especially with the various types of mortgages and deals available. Our mortgage brokers can advise you on the available options and will find you the best deal based on your individual circumstances. We’ll also guide you through the application process to ensure a smooth experience. What’s more, by using us as your first time buyer mortgage broker, we can help you set up utilities and even move into your new home.

Guarantor mortgages are where someone else – usually a family member – acts as a guarantor. This means that they agree to make the monthly payments if you fail to do so for any reason. The guarantor has to be assessed for affordability just as you would be. Guarantor mortgages aren’t offered much these days, but there is a similar mortgage option called Joint Borrower Sole Proprietor (JBSP). In a JBSP mortgage, you can have someone else on the mortgage loan as a borrower, but they aren’t on the title deeds for the property.

A guarantor mortgage or JBSP lets first time buyers get help from parents or other family members when it comes to buying a home.

Shared ownership is where you buy a percentage of a property. Usually, this is an arrangement you make with a housing association or local authority. This can make it cheaper to get onto the property ladder because you don’t have to buy the whole property and you need less in deposit. However, you would have to pay rent on the remaining percentage of the property that you do not own. You can slowly pay off more until you own the property outright.

A joint mortgage allows multiple people to apply for a mortgage to buy a property together. Everyone on the application form will have to be assessed for affordability and credit history. As well as this, they will all be responsible for making payments and will all be on the title deeds.

If one person fails to make a payment, the other people on the mortgage will have to make sure the payment is made on time. Joint mortgages are often done with a parent and child on the application so that the parent can help the child borrow more money on the mortgage and get onto the property ladder.

The LTV (loan-to-value) ratio shows how much of a property’s value you are borrowing on a mortgage. A 90% LTV ratio means that you’re taking out a mortgage for 90% of the property’s value. The other 10% would be covered by the deposit that you pay. Lenders often give better deals and lower interest rates to applicants with high deposits and lower LTVs.