1st Time Buyer Mortgage

Helping first-time buyers to get their foot on the property ladder

There are many 1st time buyer mortgages, including specialist products for 1st time buyers to help them get on the property ladder. It is important to understand the amount of deposit you’ve saved up to put towards your first home and it will help determine how much you then need to borrow as a mortgage. As well as saving for your initial deposit, you’ll also need funds to put towards fees like property searches, surveys, mortgage arrangement fees, solicitor’s fees, stamp duty, home insurance, removal costs and so on.

There are a number of initiatives from the Government and the industry that can help you buy your first home. Our advise includes:

Understanding your requirements
Calculating how much you can afford each month
Ensure your credit history is OK
How much you can borrow
Calculating a realistic purchase budget
Collating the documents required
Understanding what lenders are looking
Finding a suitable mortgage

Different schemes available to help 1st time buyers

Help to Buy Equity Loan

If you’ve managed to save a deposit of at least 5%, you might be able to use the government’s Help to Buy equity loan scheme. Under this scheme, the government will pay a further loan of up to 20% – or 40% if you’re in London – to put towards a new-build home costing up to £600,000. The scheme is open to first-time buyers only. The scheme will launch in April 2021 and will be available for 2 years.

The loan is interest-free for the first five years, and from year six, you’ll be charged 1.75% interest on the loan amount. The amount of interest you pay will then rise with inflation, and 1% will be added on top too.

Lifetime ISA

You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA. You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

You can use your savings to help you buy your first home if all the following apply:

the property costs £450,000 or less
you buy the property at least 12 months after you open the Lifetime ISA
you use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them
you’re buying with a mortgage

Shared Ownership

If you’re a first-time buyer and you earn less than £60,000 a year, you might be able to take out a shared ownership mortgage.

This means that you’ll take out a mortgage for a certain percentage of a property, and a landlord or the government will own the rest. You’ll then pay a reduced amount of rent on the value of the property that’s not in your name. You might be able to buy a larger share of the house when you can afford it.

Guarantor Mortgages

A guarantor mortgage could also help you take out a larger mortgage for your first home, as a guarantor – most likely a parent or close family member – promises to cover any missed mortgage repayments if you can’t afford them.

Although the guarantor’s name won’t go on the mortgage, it’s still a good idea to seek independent legal advice before asking someone to be your mortgage guarantor to make sure everybody knows what is expected.