First time buyers:
You got this!!

There are various types of mortgages available for first-time buyers to choose from, each with its unique features and benefits. Some common options include:

• Fixed-rate mortgages: With a fixed-rate mortgage, first-time buyers can lock in their interest rate for a predetermined period, typically ranging from two to ten years. This allows them to maintain consistent monthly payments throughout the fixed-rate term, making budgeting easier.
• Tracker mortgages: Tracker mortgages are a type of variable-rate mortgage where the interest rate tracks, or follows, a specified external index or benchmark, such as the Bank of England’s base rate. This means that the interest rate can fluctuate over time, potentially leading to changes in monthly mortgage repayments.
• Discounted variable-rate mortgages: These mortgages offer a discount on the lender’s standard variable rate (SVR) for a fixed period, typically one to five years. After the discounted period ends, the interest rate reverts to the lender’s SVR, which may result in higher monthly repayments.
• Offset mortgages: An offset mortgage links your mortgage account to one or more savings accounts, allowing you to offset your savings against your outstanding mortgage balance. This can reduce the amount of interest you pay over time, as interest is calculated based on the net balance of your mortgage and savings accounts.

As a first-time buyer, it’s essential to consider your financial situation, preferences, and future plans when selecting the right mortgage type for you. Consulting with a mortgage adviser can provide valuable guidance and help you make an informed decision.

First-time buyers typically need to provide a deposit to secure a mortgage, with the minimum amount required depending on the mortgage deals available at the time. In most cases, a deposit of at least 5% of the property’s value is necessary to obtain a mortgage. However, the more substantial the deposit, the better mortgage terms and interest rates a borrower may qualify for.

It’s worth noting that the government has introduced initiatives like the Mortgage Guarantee Scheme to encourage lenders to offer mortgages to borrowers with smaller deposits. This particular scheme aims to assist those with a 5% deposit in securing a mortgage, making homeownership more accessible to a broader range of individuals.

To summarise, first-time buyers generally need a deposit of at least 5% of the property’s value, but it’s advisable to save more if possible to secure better mortgage terms and rates. Additionally, government-backed schemes can offer further assistance to those with smaller deposits.

If you’re a first-time buyer, you may be able buy a home for 30% to 50% less than its market value. This offer is called the First Homes scheme.

The home can be:

• a new home built by a developer.
• a home you buy from someone else who originally bought it as part of the scheme.

The First Homes scheme is only available in England. Read more on the GOV website.

A first-time buyer is typically someone who has never owned a residential property before and is looking to purchase a home for the first time. The key qualification for being considered a first-time buyer is that the individual has no prior experience in owning a property used as a home.

If you’re buying with a person who has bought a property before, your first time buyer status no longer applies.

As a first-time buyer, it is possible to obtain a 100% mortgage, which means you would not need to provide a deposit. However, such mortgage options are limited and usually come in the form of a guarantor mortgage or a family deposit mortgage.

A guarantor mortgage involves a third party, usually a family member or close friend, agreeing to be responsible for the mortgage repayments if the borrower is unable to meet them. A family deposit mortgage, on the other hand, allows a family member to provide a percentage of their own property’s value as security for the mortgage, essentially acting as a deposit.

Although 100% mortgages are available, they are not as common, and lenders may still reject an application if they perceive the borrower to be too high a risk. It’s essential to carefully consider the implications of a 100% mortgage and consult with a mortgage adviser to determine if this option is suitable for your financial situation and needs.