First Time Buyer
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First Time Buyers
What are the typical requirements to apply for a mortgage as a First Time Buyer?
First is finding out what your deposit is going to be and where it’s coming from. The most common route one is normally three months’ bank statements. Try not to move any of the money around, otherwise we‘ll just need more statements.
We’ll also need your last three months pay slips, passports, driving licences and proof of address dated within the last three months.
If you’re self-employed, it starts to become a little bit more complicated around the paperwork, but it’s normally tax calculations and tax year overviews down to full accounts.
What is the maximum amount that can be borrowed for a mortgage as a First Time Buyer? What’s the minimum deposit required?
It depends. The mortgage landscape changes quite often. But at the moment, in April 2025, you can probably borrow a maximum of six times your income. We’ll run some calculations with you on the phone to see where we can get to.
In terms of deposit, often lenders release deals that look fabulous, but they’re all about attracting people. There are some 100% mortgage deals, which won’t require any kind of deposit – but there are a lot of criteria surrounding them. For example, one deal is based on the rent you’ve been paying [correct at the time of recording in April 2025].
Another lender will accept a flat £5,000 deposit, but the industry standard is a minimum of 5%. That gives us the widest range of lenders. It’s worth having a conversation, even if you don’t have 5%. We can work out what you will need and your overall budget, even if it’s 12 months until you’ll be buying a house.
What are the types of interest rates available on a mortgage for a First Time Buyer?
Most people have heard of fixed rates, where the interest rate is fixed for a two or five year period. Some lenders will also do three years and some do longer terms.
There are also discount rates and tracker rates, which follow the Bank of England base rate. There are many different variations, but most First Time Buyers choose a fixed rate. They’ve never been in this process before, and they want to know exactly what their payments are going to be per month.
I tend to recommend a fixed rate unless you are doing something slightly different. That’s rare for First Time Buyers.
What are the pros and cons of fixed versus variable interest rate mortgages for First Time Buyers?
Probably 90% to 95% of First Time Buyers opt for a fixed rate (Source: UK Finance, 2015–2021). Whatever interest rate you choose – for example, let’s say it’s 4%, that will stay with you for the time you fix for. If it’s a two-year fixed deal, your rate won’t change for that amount of time and nor will your monthly mortgage payment.
There are usually early repayment charges, so if you were to sell your house and pay off the mortgage, you have to pay a certain percentage to the lender for coming out of it early. But most people don’t move into a house and sell within six months. It’s just something to consider.
The opposite is a variable rate. The main type is a tracker, which follows the Bank of England base rate. If it goes up, your rate goes up. If it comes down, your rate comes down. A lot of tracker deals have no early redemption charges.
So if you’re looking to pay off the mortgage within a certain period, or you think rates are going to come down, you might want to get a tracker deal for now, and perhaps fix it later.
We’d run calculations to make sure that’s cost effective. There’s no point in spending £50 to save £50.
What government schemes are available to help First Time Buyers?
In the past there was Help to Buy, but that is no longer in place. You still have Shared Ownership, where the government or a governing body will sell you a percentage of the property, and then you pay rent to them every month as well as the mortgage.
Not that many Shared Ownership opportunities come up, and they tend to go quickly because you can buy a property with lower income this way.
A lot of new build developers might give you a 5% deposit contribution which can boost your own deposit. The alternative is something called the Own New scheme, and at the time of recording in April 2025, three to four lenders are involved in this.
Instead of the developer giving you the 5% deposit to put towards the house, that value goes to the lender and they will offer you a better rate. In effect, your rate could go from 4%, which is typical now for a 90% Loan to Value product, to just 1% for the first two years.
Having said that, when we look into this scheme for clients there are often more savings to be made with a 5% upfront deposit on the house than potentially saving a couple of thousand pounds on your monthly payments in the first two years. But obviously we would discuss that with you using real terms.
There is also a discount on stamp duty for First Time Buyers. If you buy a house below £300,000 as a First Time Buyer, there’s no stamp duty.
What documents do I need to get pre-approved for a mortgage as a First Time Buyer?
There are standard documents we’re always going to request – passports, proof of address, your latest three pay slips if you’re employed, and your latest P60.
If you’re self-employed, it’s usually the last two years’ accounts, tax year overviews and tax year calculations.
It also depends on your scenario. If you’ve got some adverse credit, we may want a credit report, or if you get some kind of ad hoc income such as rent, child maintenance or Universal Credit, we’ll need an annual statement. If we need anything else, we’ll let you know, but we try to keep it minimal.
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What are the steps to follow when applying for a mortgage as a First Time Buyer?
Being organised is the main thing. That way you know exactly where you’re going to be and it takes the stress out of things if we’ve got everything we need at the start. Later, lenders may ask for more documents, or have questions, but the process is pretty simple.
We would get you a Decision in Principle, then once you find a property we apply for the mortgage. Normally within a two-week period the lender would have reviewed pay slips and documents and asked any questions. They would also value the property to make sure it’s worth what you’re paying for it.
At that stage, once you have a mortgage offer, it’s up to you whether you want to get your own building survey. If the bank won’t lend on the property, you don’t want to waste money on a building survey or any legal searches – we would wait until we get the mortgage offer before that starts. We help you keep the costs to a minimum.
It’s important to understand the difference between the valuation and a survey. A survey is independent – it’s for you. We can’t use the survey to justify the valuation, but it’s for your benefit, to make sure the property is not falling down and it’s worth the money.
For a valuation, the lender will look around the local area to see what’s sold in the last six months. If they don’t think it’s worth what you’re paying, they will say what it’s worth. I’ve only ever had one valued at more than it’s been bought for.
But they’re not looking at loft spaces or under floorboards, whereas a survey is a 40 to 50 page document telling you what’s wrong with the house. You’ll never get a survey saying this is the best possible purchase in your life! It can list very small things as well as big things like needing a new roof.
It provides a lot of useful information and may help you potentially negotiate the price. But it’s best not to do that until the basic valuation has been done from the lender.
What are the most common mistakes to avoid when applying for a mortgage as a First Time Buyer?
The biggest mistake is not picking up the phone and having a conversation. People often think they’re in a worse position than they usually are. Trust me, we’ve seen it all. Even if you aren’t ready just yet, you soon can be by following a few steps.
From the moment you’re looking to buy a property, don’t take out any new credit, whether that be a phone or a credit card. Lenders use a credit score which factors in the Loan to Value, property type and your credit record. A score comes back from an algorithm and you’re either above or below the line.
If you’re above the line, we can proceed. If you’re below the line, unfortunately we’d have to look at another lender. A lot of people don’t have bad credit and might just decide to get a new phone for £20 a month – but end up being declined for a mortgage.
Lenders worry if you’ve taken out any credit in the three months before you apply for a mortgage – why are you running up your credit before the mortgage decision? They’re concerned that you’re overextending yourself too quickly.
There is also something called gearing. If you have £2,000 on a credit card and the limit is £2,000, that’s seen less favourably than having £1,000 on each of two cards with a £2,000 limit. Basically, you need to avoid borrowing over 80% of your credit card value – and don’t just extend the limit, as it doesn’t work that way.
When people are declined, 60% to 75% of the time it’s either the property valuation or credit. It’s never affordability because we’ve already had that conversation.
Avoid payday loans – that’s a big no-no. It will immediately mean we need a different lender that’s more expensive potentially, and we don’t want that. We also don’t want to see any gambling sites on your bank statements. Some lenders won’t look at bank statements, but you will have a better chance with no betting on there.
If you can, pay off your credit cards in full every month – that improves your credit report and credit score.
Can I qualify for a mortgage as a First Time Buyer with bad credit?
That solely depends on the credit situation, but in essence, yes. Some people say they have really bad credit, but it’s just one missed payment, which is not severe at all.
Your options could be limited. You might have to pay higher interest rates and provide larger deposits. Borrower with bad credit history might have to pay higher interest rates and provide larger deposits.
If you’ve got Individual Voluntary Agreements (IVAs), debt management plans, county court judgements (CCJs) and payday loans, that’s pretty bad, but it’s not impossible to get a mortgage. It’s all about how long ago things happened and if things are paid off.
Just pick up the phone. – it’s better to know where you are and at least plan to get mortgage ready in the future. Every lender has different criteria. We’ve got just over 100 lenders on our panel, and a dedicated contact at every bank.
We can talk to them and piece together a case for you. Often adverse credit isn’t laziness or bad money management. It could be a life event like poor health or redundancy. Lenders do have a heart, and your story can go a long way.
It might be down to divorce – the ex-partner hasn’t paid the mortgage and caused a debt in your name. A lender will accept that, with a bit of evidence to show it’s true, and may well be happy to give you a mortgage.
What happens if I miss a mortgage payment as a First Time Buyer?
It’s not the best. No-one wants to miss mortgage payments – and before you reach that point, there are things to help you.
At the time of recording, a lot of lenders are signed up to The Mortgage Charter which means you can either take a payment holiday or move to interest only for a short time. In an ideal world we wouldn’t recommend those, as it’s easy to just start paying the interest, but then you’re not reducing the actual loan.
If you can extend your term by six months or take a payment holiday for six months, the debt is just being pushed down the road. But in difficult circumstances, like losing your job or having a health matter in the family, lenders are there to assist you.
If you do miss a mortgage payment, obviously the lender will want their money. You can either catch it up or, in severe cases, the house will be repossessed. But it’s in the lender’s best interest to help you – both morally and because they don’t particularly want to sell your house.
If you think you’re going to miss mortgage payments, pick up the phone. There are helplines if you’re struggling. We can always have that conversation with you too. Debt consolidation could be an option to consider.
With money problems, the very first person to call is the lender. They will work with you, and they want to be told at the very first instance. If you contact them before the missed payment actually happens, they’ll be even happier to help you.
It might give you some breathing space. Missed mortgage payments are one of the worst types of adverse credit, so ideally you will want to limit them as much as possible.
Can I get a Buy to Let mortgage as a First Time Buyer?
Yes, you can. Not all lenders will do mortgages for a First Time Buyer, first-time landlord, but there are some out there that will.
How can a mortgage broker help me with my First Time Buyer mortgage application?
We’re here for you every step of the way until you can complete. We’ll liaise between the estate agent and the solicitors and help you throughout the process. Obviously, it is a daunting thing. It’s probably the biggest financial commitment you’re going to make in your adult life.
Our hope is that you’ll stay with us for the life of the mortgage – your first home, remortgage, a next purchase and possibly later life lending. If you’re ever unsure about something, you can just text or Whatsapp us. We really don’t work nine-to-five. If someone messages at nine o’clock at night, nine times out of ten, we will message back straight away.
The other components in a mortgage process are estate agents and solicitors, who you might work with again in the future, but it’s not the same as with us. We’re here for the long run.
Around 85% of all mortgages now go through an intermediary, which has gone up from 60% in the last decade. With us that’s because we have great relationships with clients who come back to us time after time.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR PROPERTY. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE SOME FORMS OF BUY TO LET MORTGAGE.
Podcast recorded 04/2025