Whether you're looking in Nottingham, London, or a quiet village in Yorkshire, understanding how first-time buyer mortgages work in the UK is key to getting started on the right foot.
What Is a First-Time Buyer Mortgage?
A first-time buyer mortgage is essentially the same as any other residential mortgage — it’s a loan you take out to buy a home. What makes it different is that it's tailored for individuals who have never owned a property before. Many lenders offer specific deals, incentives, or slightly better rates for first-time buyers to help them take that initial step onto the property ladder.
These mortgages are available from a wide range of banks, building societies, and independent lenders — and many come with added perks such as cashback offers, reduced fees, or lower interest rates for a set period.
Who Qualifies as a First-Time Buyer?
The definition might sound straightforward, but it’s important to check the fine print. Generally, you're considered a first-time buyer if:
• You’ve never owned a residential property in the UK or abroad.
• You’re buying a property to live in, not as a buy-to-let or investment.
• You’re not buying with someone who has previously owned property (unless your lender still accepts both of you under their first-time buyer criteria).
If you've inherited a property in the past or owned one through a shared ownership scheme, some lenders may not consider you a first-time buyer.
How Much Can You Borrow?
The amount you can borrow depends on several factors, including:
• Your income: Most lenders offer between 4 and 4.5 times your annual income. Some may go up to 5 or even 5.5 times for applicants with strong financial credentials.
• Your credit score: A good credit history will open the door to better deals and higher loan amounts.
• Your outgoings: Lenders assess your monthly financial commitments such as car finance, credit cards, childcare costs, and personal loans.
• Your deposit: The more you put down as a deposit, the less risky you appear to lenders — which could mean better interest rates.
How Much Deposit Do You Need?
In most cases, the minimum deposit required is 5% of the property's value. So, if you're buying a house worth £200,000, you’d need at least £10,000 as a deposit.
However, putting down 10–20% or more will give you access to lower interest rates and a wider choice of mortgage products.
If saving up feels like a tall order, there are schemes and solutions available — more on those shortly.
Types of Mortgages for First-Time Buyers
1. Fixed-Rate Mortgages These offer a set interest rate for a specific period (usually 2, 3, or 5 years), which means your monthly payments won’t change. It’s a great option if you want budgeting certainty.
2. Tracker Mortgages These follow the Bank of England base rate, so your payments can go up or down. They’re often cheaper initially but come with less predictability.
3. Discount Mortgages These are linked to the lender’s standard variable rate (SVR), offering a discount for a set period. Like tracker mortgages, they can fluctuate.
4. Offset Mortgages These link your mortgage to your savings. Instead of earning interest on your savings, the money is used to reduce the amount of interest you pay on your mortgage.
Government Schemes to Help First-Time Buyers
1. Lifetime ISA (LISA) A savings account that allows you to save up to £4,000 a year, with a 25% bonus from the government. You can use it towards your first home (up to £450,000).
2. First Homes Scheme This scheme offers new-build homes to first-time buyers at a discount of 30–50% compared to the market value.
3. Shared Ownership You buy a share (usually between 10% and 75%) of a home and pay rent on the remaining portion. This can make home ownership more accessible on a smaller budget.
4. Mortgage Guarantee Scheme Designed to encourage lenders to offer 95% mortgages by giving them a government-backed guarantee. It’s aimed at helping buyers with smaller deposits.
The Mortgage Application Process
1. Get a Decision in Principle (DIP) Also known as an Agreement in Principle (AIP), this is a statement from a lender saying how much they'd be willing to lend you. It’s not binding but gives you a clear idea of your price range and strengthens your position with estate agents.
2. House Hunting Once you know your budget, start viewing properties. Take your time and don’t rush — the right home is worth waiting for.
3. Make an Offer Once you’ve found a property, make a formal offer through the estate agent. This can be lower than the asking price — negotiation is common.
4. Apply for a Mortgage When your offer is accepted, submit your full mortgage application. You’ll need to provide documents like payslips, bank statements, and proof of identity.
5. Valuation and Survey The lender will carry out a valuation to make sure the property is worth the purchase price. You might also want to arrange your own survey to check for structural issues.
6. Mortgage Offer If everything checks out, you’ll receive a formal mortgage offer — usually valid for 3–6 months.
7. Legal Work (Conveyancing) A solicitor or conveyancer will handle the legal side of the transaction, including local searches and transferring ownership.
8. Exchange and Completion Once contracts are exchanged, the sale becomes legally binding. On completion day, you get the keys and officially become a homeowner.
Costs Involved in Buying Your First Home
It's not just the deposit you need to save for. Other costs include:
• Stamp Duty – First-time buyers in England and Northern Ireland don’t pay any Stamp Duty on properties up to £425,000.
• Valuation fees – Often covered by the lender, but not always.
• Survey fees – These vary depending on the level of survey you choose.
• Legal fees – Usually between £800 and £1,500.
• Mortgage arrangement fees – Some mortgages come with a product fee (often around £999), though it can sometimes be added to the loan.
• Moving costs – Whether you hire a removal van or do it yourself, don’t forget to budget for the move itself.
Why Use a Mortgage Broker?
While it’s possible to go directly to a bank or building society, using a mortgage broker in Nottingham or wherever you’re based can be incredibly valuable — especially as a first-time buyer.
A good broker will:
• Help you understand your options.
• Compare deals from multiple lenders.
• Guide you through the application process.
• Flag any potential issues early on.
• Help you access exclusive broker-only deals.
Think of them as a supportive partner, helping you navigate unfamiliar terrain.
Tips for First-Time Buyers
✅ Check Your Credit Report Before applying, make sure your credit file is accurate and up-to-date. Sites like Experian, Equifax, and TransUnion let you view your report for free.
✅ Stick to Your Budget It’s easy to fall in love with a property slightly out of your price range, but stretching too far can leave you financially vulnerable.
✅ Account for All Costs Remember to budget for furnishings, insurance, utility connections, and council tax — they add up quickly.
✅ Be Patient Buying a home can take weeks or even months. Try not to rush or panic during delays — they’re common and often part of the process.
Final Thoughts
Buying your first home is an incredible milestone. Yes, the paperwork and jargon can be frustrating, but the reward is a place to truly call your own. With the right preparation, support, and a clear understanding of how first-time buyer mortgages work, you’ll be in a strong position to make informed, confident choices.
Whether you're months away from buying or just starting to save, remember: knowledge is power, and professional guidance can make all the difference. If you're ready to take the next step, speaking to a mortgage broker in Nottingham could be one of the smartest moves you make.