First-time buyer mortgages: a clear guide

First-time buyer mortgages help you buy a home to live in. You usually contribute a deposit, then repay the loan and interest each month. The right mortgage needs to suit both your purchase price and your everyday budget.

Before viewing homes, check what you could borrow, how much cash you need and what the monthly payments might be. This guide takes you through those decisions and the steps from an initial check to getting your keys.

Start with these four buying essentials

Who counts as a first-time buyer?

Lenders set their own rules for first-time buyer deals. These can differ from the rules for tax relief or savings schemes, especially when buying with someone who has owned a home.

For Stamp Duty Land Tax first-time buyer relief, all buyers must qualify. Previous ownership of a residential property or a share in one, including an inherited home or property abroad, can rule you out. Ask your solicitor to confirm your position.

Build a budget before you start

01 · DEPOSIT

See how your deposit affects borrowing

On a £200,000 home, a 5% deposit is £10,000, leaving a £190,000 mortgage. This is a 95% mortgage: the loan covers 95% of the property value. With a 10% deposit, you would borrow £180,000 instead.

Some specialist products accept less than 5%, but availability and eligibility vary. A smaller deposit also leaves less protection if the property falls in value.

---

02 · AFFORDABILITY

Check your income and monthly spending

Your salary alone does not set your borrowing limit. Lenders also check debts, childcare, regular bills and the mortgage term. They may treat overtime, bonuses or self-employed income differently.

For example, two mortgage applicants with the same income may receive different borrowing limits. A broker can assess likely options, but only the lender can approve the loan. Explore how mortgage affordability works before setting your price range.

---

03 · UPFRONT COSTS

Allow for more than the deposit

Budget for legal work, searches, a survey and any mortgage fees. You may also need money for removals, furniture and initial repairs. The cost of buying a home can reduce the savings available for your deposit.

In England and Northern Ireland, eligible first-time buyers pay no SDLT on the first £300,000 and 5% on the portion up to £500,000. Relief does not apply above £500,000. Scotland and Wales use different property taxes. Check the current SDLT rules before budgeting.

Compare the mortgage beyond its rate

Choose how your interest rate works

A fixed-rate mortgage keeps the same interest rate for an agreed period. By contrast, a tracker is a variable-rate mortgage that follows a named rate, usually the Bank of England base rate. Other variable rates can change under the lender’s terms.

Compare fees, early repayment charges and overpayment limits as well as mortgage rates. A lower rate with a large fee may cost more overall. The different types of mortgages suit different needs.

Balance the term against total interest

Most first-time buyers use repayment mortgages, which reduce the loan balance as well as paying interest. A longer term usually lowers monthly repayments but increases total interest, assuming the same rate. Also check what happens when your initial deal ends.

Prepare your documents before you apply

From mortgage checks to your first home

01 · INITIAL CHECK

Get your Agreement in Principle first

An Agreement in Principle (AIP) estimates what a lender may offer after initial checks. It can help you set a budget and show estate agents that you have explored your borrowing options.

However, an AIP is not a mortgage offer or a guarantee. Lenders may use a soft or hard credit check, so check which applies before proceeding.

---

02 · FULL APPLICATION

Apply once you have found a home

Once you agree a purchase, your adviser can help submit the full application. The lender checks your finances and values the property. Meanwhile, your solicitor handles the legal work. A lender’s valuation does not replace a survey of the home’s condition.

---

03 · COMPLETION

Finish the legal checks and move

Before making a binding commitment, ask your solicitor to confirm the mortgage offer, legal checks and funds are ready. The legal process differs across the UK, including Scotland’s missives system. On completion, the purchase funds transfer and you can collect the keys.

Explore help with buying your first home

Boost your savings with a Lifetime ISA

Eligible savers can open a Lifetime ISA aged 18–39, pay in up to £4,000 a tax year and receive a 25% government bonus. To use it for a qualifying home purchase, the price must be £450,000 or less.

You must also wait at least 12 months after your first payment and meet the mortgage and withdrawal rules. Other early withdrawals usually face a 25% charge, which can reduce your own savings. Check the Lifetime ISA purchase rules first.

Check shared ownership and family support

Shared ownership lets you buy part of a home and pay rent on the rest. In England, initial shares generally range from 10% to 75%, depending on the home. Mortgage payments, rent and service charges all count towards your budget.

Family support may involve a gifted deposit, savings as security or shared responsibility for borrowing. However, the risks depend on the arrangement. Compare first-time buyer schemes and support routes before committing.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Your first-time buyer mortgage questions answered