First-time buyer mortgages

Planning to buy your first home? Cleerly is here to help.

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First-time buyer mortgage experts

Purchasing your first house is one of life’s biggest milestones – nothing beats that feeling of being handed the keys to your new home for the first time. But there are plenty of obstacles to navigate along the way.

You've saved up for a deposit and found the property you want to call home. But now comes the daunting part - turning the dream into a reality. There’s a lot to be done before putting that final signature on the dotted line - arranging a mortgage in principle, negotiating the right price, making an offer, appointing a solicitor...the 'to do' list can seem endless. Thankfully, our team of specialist first-time buyer mortgage advisors are here to help. Call us today on 02394 212 912 or complete an online quote.

What is a First Time Buyer?

For over 20 years, Cleerly has been assisting first-time buyers with their mortgage applications.

A First Time Buyer mortgage isn't a special kind of product, even though some lenders do offer mortgages specifically designed for First Time Buyers. In reality, First Time Buyers generally have access to the same mortgage deals as anyone else.

You're considered a First Time Buyer if:

  • You've never owned a residential property, whether it's in the UK or abroad.
  • You've only ever owned a commercial property without any living space attached, like a pub with upstairs accommodation.

You're not considered a First Time Buyer if:

  • You're purchasing a property with someone who currently owns or has previously owned a home.
  • You've inherited a home, even if you never lived in it and it has since been sold.
  • Someone who already owns a home, like a parent or guardian, is buying a property for you.

If you're unsure about your First Time Buyer status, always double-check with an experienced mortgage broker like Cleerly.

 

How much can I borrow as a First Time Buyer?

Most lenders determine loan amounts by multiplying your annual income, usually by four to four-and-a-half times. This holds true even if you're a First Time Buyer.

But income isn't the whole story. Lenders also assess your affordability, which means they'll compare your income to any debts and regular expenses you have.

For an indication of your borrowing capacity, try our mortgage affordability calculator. It uses your income and deposit to estimate your borrowing ability. For a more precise figure, especially tailored to First Time Buyers, we'd suggest booking an initial consultation with a Cleerly mortgage broker who can evaluate your full financial situation.

How much deposit do I need for a First Time Buyer mortgage?

To qualify for a 95% loan-to-value (LTV) mortgage, you'll need a deposit that's at least 5% of the property's value. This is generally the minimum deposit most lenders require unless you explore specialist mortgage options.

Here's a tip: The larger your deposit, the better the rates you can usually secure. So, even increasing your deposit from 5% to 10% can make a noticeable difference in the mortgage rates available to you.

 

Government schemes for First Time Buyer mortgages

Saving up for your first home can be tough, especially in today's financial climate. But don't worry—there are various government schemes designed to help First Time Buyers who might not have the benefit of family or friends to support them with a guarantor or family-assisted mortgage.

 

Lifetime ISA:

  • For those aged between 18 and 40, the government offers a 25% boost to your savings, up to £1,000 per year, until you turn 50.

 

Right to Buy:

  • Also known as "Right to Acquire", this scheme allows tenants renting from a council or local housing association to buy the home they live in.

 

First Homes Scheme:

  • Available to First Time Buyers over 18, this scheme offers new-build homes at a discount of 30-50% off the market value.

 

Shared Ownership:

  • This option lets you co-own a property with a landlord, typically a council or housing association, allowing you to buy a share of your home and pay rent on the remaining portion.

 

Mortgage Guarantee Scheme:

  • Running until 30 June 2025, this scheme helps you secure a mortgage with just a 5% deposit.

Buying your first home?

Speak to a Cleerly mortgage consultant today

Whether you’re looking to get the ball rolling on a mortgage application or you’re just after some friendly advice, don’t hesitate to give us a call on 02394 212912 or request a call back.

Different Types of Mortgages for First Time Buyers

Choosing the right mortgage depends on your personal circumstances, such as financial stability and preferences. A specialist mortgage broker can help you navigate through all the available options and will frequently have access to exclusive offers. Here are some options to consider:

Fixed Rate Mortgage

  • What it is: The interest rate is locked in for a specific period.
  • Pros: Protection from rising interest rates.
  • Cons: You won't benefit if rates fall. Once the deal ends, you're moved to the lender’s standard variable rate (SVR) unless you remortgage.

 

Standard Variable Rate (SVR) Mortgage

  • What it is: Rates are set at the lender's discretion and can change at any time.
  • Pros: No penalties for moving mortgages or overpaying.
  • Cons: Usually higher rates compared to other deals. It’s the lender's default rate of interest.

 

Tracker Rate Mortgage

  • What it is: Follows an external financial indicator, often the Bank of England (BoE) base rate.
  • Pros: Potentially lower starting rates.
  • Cons: Rates can rise, making it more expensive. If rates fall, your interest, and thus your payments, decrease.

Discount-Rate Mortgage

  • What it is: Set at a percentage below the lender’s SVR.
  • Pros: Lower rates if the SVR drops.
  • Cons: Rates are unpredictable and can rise.

 

Capped and Collared Mortgages

  • What it is: Variable-rate mortgages with caps (maximum rates) and collars (minimum rates).
  • Pros: Caps protect you from high rates.
  • Cons: Collars prevent benefiting from lower rates.

 

Offset Mortgage

  • What it is: Uses your savings to reduce the interest you pay.
  • Pros: Substantial savings can significantly lower your interest payments.
  • Cons: Requires substantial savings to be effective. Family offset mortgages allow family members to use their savings to help reduce your interest payments.

Remember, the best mortgage for you will depend on your unique situation. Consulting with a mortgage broker like Cleerly can provide personalised advice and access to the best deals available.

First Time Buyer mortgage considerations

We've covered the essentials for First Time Buyer mortgages, but here are a few other things to keep in mind:

Monthly Repayments:

  • Once you have the keys to your new home, you'll begin making mortgage payments. Be prepared for the first payment to be higher than usual as it may include interest from the day you moved in until the end of that month, plus your standard monthly payment for the following month.

 

Budgeting:

Besides your monthly mortgage payments, there are additional costs to consider when buying your first home. These include:

  • Survey costs
  • Solicitor’s fees
  • Buildings insurance
  • Additionally, remember to budget for your regular monthly household bills such as:
  • Gas and electricity
  • Broadband
  • Food shopping

 

Economic Factors:

  • Economic events, such as the cost-of-living crisis, can significantly impact the housing market. Mortgage providers might:
  • Tighten lending criteria
  • Increase the required deposit amount
  • During the pandemic, interest and mortgage rates hit historic lows, but recent economic challenges have caused inflation and mortgage rates to rise again.

Ensuring You Can Afford Your Mortgage

Your lender needs to confirm that you can consistently afford your mortgage payments, even if interest rates rise on a variable interest rate mortgage. Here's what they'll typically check:

 

Employment:

  • Current job status and stability.

 

Income:

  • Salary and any additional sources of income.

 

Expenses:

  • Regular monthly expenses and how they impact your budget.

 

Credit Commitments:

  • Existing loans, credit cards, and direct debits.

 

Debts:

  • Any outstanding debts or past defaults.

 

Other Financial Commitments:

  • Additional costs like childcare or school fees.

Your dedicated Cleerly Mortgage Consultant will guide you through the considerations so you're well prepared.

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How to Apply for a Mortgage as a First Time Buyer

The ideal time to apply for a mortgage is when:

  • You are in a stable financial position.
  • Your credit file is in good standing.
  • You’ve saved a decent amount for a deposit.

 

Steps Before the Application Stage

 

Determine How Much You Can Borrow:

  • Get a mortgage agreement in principle (AIP). This outlines how much a lender is likely to lend you. Many estate agents require this before allowing you to view properties.

 

Find a House You Love:

  • Start your house hunt and identify a property that suits your needs.

 

Make an Offer:

  • Once you find the right house, make an offer to the seller.

 

Submit Your Formal Mortgage Application:

  • If your offer is accepted, submit your formal mortgage application for the agreed amount.

 

Documents You’ll Need:

Lenders will need evidence of the property you're buying, your income, and your identity. Prepare the following documents before meeting your mortgage broker:

  • Proof of Identity: Passport or driving license.
  • Proof of Current Address: Utility bills or bank statements.
  • Proof of Income: Employed: 3-6 months of payslips. Self-employed: 12-36 months of accounts and tax calculations.
  • Bank Statements: 3-6 months of bank statements to show your spending habits and confirm you can manage repayments.

How Long Does a Mortgage Application Take?

The timeframe for a mortgage application can vary widely depending on individual circumstances and the lender's efficiency. Here’s a breakdown of what to expect:

 

Typical Timeline:

  • Standard Process: Your mortgage could be ready in as little as 2 weeks.
  • Complex Situations: If your application is more complicated or if there are issues, it might take longer, generally around 4 weeks.

 

Potential Delays:

  • Back and Forth: Complex situations requiring additional documentation or clarification can slow down the process.
  • Valuation Issues: Problems raised during the property valuation can also add to the timeline.

 

Getting Accurate Estimates:

  • Consultant Insight: Your Mortgage Consultant will provide a more precise timeline once they begin the process, tailored to your specific situation.

 

How We Simplify the Process

At Cleerly we aim to take the stress out of choosing and arranging your mortgage by providing comprehensive, independent advice:

  • Extensive Lender Network: We source the most suitable mortgage options for your needs from over 90 lenders.
  • End-to-End Management: Our dedicated UK mortgage consultancy team handles the entire process—from application to successful completion.

By managing the application process, we maintain greater control and keep you updated at every stage. Your solicitor will handle the legal aspects of your property purchase or remortgage, especially once the mortgage offer is released and the funds are being prepared for completion. Throughout this process, we remain available to assist and answer any questions you may have.

First-time buyer mortgages


Cleerly's pledge

As the go-to UK mortgage broker for first-time buyers and contractor mortgages for independent professionals, Cleerly will help you to:

  • Secure a mortgage with as little as 5% deposit
  • Borrow up to 5 times your income
  • Benefit from the best deals on the market
 
Our glowing 4.9 Trustpilot rating showcases Cleery's commitment to being helpful, proactive, straight-talking and transparent.
 
Speak to a mortgage consultant today on 02394 212 912.

First-time buyer mortgage FAQs

Securing a mortgage is a difficult process to navigate at the best of times. If you're a First Time Buyer it can be daunting knowing where to start or which lenders to approach. As a First Time Buyer mortgage broker with over 20 years in the business, our specialists can talk you through your options and help you to create a strong, self-explanatory mortgage application that puts you in the best position to be accepted by a lender.

The good news is a parent, guardian, spouse or even a friend can be a guarantor on a First Time Buyer mortgage.

Securing a first-time mortgage with a poor credit rating can be tough, but not impossible. Your eligibility will depend on a range of factors including income, property value, and the nature of credit issues. Whether due to missed payments or insufficient credit history, there's hope. As seasoned mortgage brokers, we provide tailored advice to enhance your credit standing and frame your application appealingly to lenders, aiding numerous First Time Buyers in securing a mortgage.

When choosing a mortgage, it’s important to understand the differences between repayment and interest-only options:

Repayment Mortgage:

  • Monthly Payments: You pay back both the capital (the amount you initially borrowed) and the interest.
  • End Goal: By the end of your mortgage term, you’ll have fully repaid the total loan.

Interest-Only Mortgage:

  • Monthly Payments: You only pay the interest on your loan each month.
  • End Goal: At the end of the mortgage term, you still owe the original amount you borrowed. You'll need to demonstrate how you plan to repay this remaining balance.

Since the financial crash of 2008, interest-only mortgages have become a rare option for First Time Buyers. Understanding these distinctions can help you make a more informed decision on the best mortgage type for your financial situation.

As a First Time Buyer, you might be drawn to a longer-term mortgage because it reduces your monthly payments by spreading the cost over a longer period. Here's what you need to know:

Standard Mortgage Term: Typically, mortgages are set for 25 years.

Longer-Term Mortgages: Many lenders now offer mortgages that extend up to 40 years.

Key Consideration: While lower monthly payments can ease your budget, remember that a longer-term mortgage means you'll pay more in interest over the life of the loan. Understanding these factors can help you make an informed decision that aligns with your financial plans.

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