Congratulations. you read our blog on whether to rent or buy and decided to take the plunge into home ownership! Buying your first home is one of the biggest financial decisions you will ever make. For most people, it starts with understanding mortgages for first time buyers. This guide brings everything together in one clear, practical place so you can move forward with confidence, avoid common mistakes, and understand exactly what lenders expect from you.
What Is a Mortgage?
A mortgage is a loan from a bank or building society used to buy a property. You repay it in monthly instalments over an agreed term, usually between 20 and 40 years. The loan covers the purchase price minus your deposit, and interest is charged on top.
For first time buyers, the mortgage choice you make can affect your monthly costs and total repayment by tens of thousands of pounds over time.
Who Qualifies as a First Time Buyer?
You are considered a first time buyer if you have never owned a residential property anywhere in the world. This includes freehold and leasehold properties. If you are buying with someone else, all buyers must be first time buyers to qualify for first time buyer schemes and tax reliefs.
How Much Can First Time Buyers Borrow?
Most lenders will allow you to borrow up to 4.5 times your combined annual income, although this depends on your circumstances.
Lenders assess:
- Income and employment stability
- Existing debts and credit commitments
- Monthly spending habits
- Credit history and score
Before applying, check your credit report with Experian, Equifax, or TransUnion. Errors can usually be corrected online.
How Much Deposit Do You Need?
Most mortgages for first time buyers require a minimum 10% deposit, although some lenders offer products at 5%.
As a general rule:
- Larger deposit = lower interest rate
- Smaller deposit = fewer mortgage options
In London, the average first time buyer deposit was around 24% in 2022, reflecting higher property prices. While this is not a requirement, it shows how competitive the market can be.
Loan to Value Explained
Loan to Value (LTV) is the percentage of the property price you borrow.
- 90% LTV means a 10% deposit
- 95% LTV means a 5% deposit
Lower LTVs usually unlock better mortgage deals.
Upfront Costs First Time Buyers Must Budget For
Your deposit is not the only cost involved when buying your first home. You should also budget for the following upfront expenses.
Conveyancing or Solicitor Fees
Estimated cost: £800 to £1,500
This covers the legal work involved in buying your property, including searches, contracts, and transferring ownership.
- Leasehold properties are usually at the higher end
- New builds can cost more due to additional legal work
Some solicitors charge a fixed fee, while others itemise costs. Always check what is included.
Valuation and Survey Costs
Estimated cost: £300 to £1,500
There are different levels of surveys:
- Mortgage valuation: £150 to £350
- HomeBuyer Report: £400 to £900
- Full structural survey: £700 to £1,500
The mortgage valuation is for the lender’s benefit, not yours. Many buyers choose a HomeBuyer Report or full survey for peace of mind.
Mortgage Arrangement Fees
Estimated cost: £0 to £2,000
Some lenders charge a product or arrangement fee to secure a specific mortgage deal.
- Low interest rate mortgages often come with higher fees
- Fees can usually be added to the mortgage, but this increases total interest paid
Always compare the total cost over the fixed period, not just the headline rate.
Buildings and Contents Insurance
Estimated cost: £150 to £350 per year
Buildings insurance is required by lenders from exchange of contracts.
- Flats may include buildings insurance within service charges
- Contents insurance is optional but strongly recommended
Costs depend on property size, location, and cover level.
Removal Costs
Estimated cost: £300 to £1,200
Costs vary depending on:
- Distance of the move
- Amount of furniture
- Whether you pack yourself
Some buyers reduce costs by hiring a van, though this may not be suitable for larger moves.
Stamp Duty Land Tax (If Applicable)
Estimated cost: £0 to tens of thousands
Many first time buyers pay no Stamp Duty due to reliefs.
- 0% up to £300,000
- 5% on the portion between £300,001 and £500,000
If the purchase price exceeds £500,000, standard rates apply above that threshold.
Typical Total Upfront Costs (Excluding Deposit)
For most first time buyers, non-deposit upfront costs usually fall between:
£2,000 and £5,000
This figure can rise for higher-value properties, leaseholds, or more complex purchases.
Planning for these costs early helps avoid delays and reduces financial stress during the buying process.
Stamp Duty for First Time Buyers
Stamp Duty Land Tax is paid when buying property in England. First time buyers benefit from relief.
| Property Price | Stamp Duty Rate |
|---|---|
| Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% |
| Above £500,000 | Standard rates apply |
Stamp Duty must be paid within 14 days of completion. Your conveyancer usually handles this.
Types of Mortgages for First Time Buyers
Understanding mortgage types is essential before applying.
Fixed Rate Mortgages
Your interest rate and monthly payments stay the same for a set period, usually 2 to 5 years.
Pros
- Payment certainty
- Protected from rate rises
Cons
- You may pay more if rates fall
Variable Rate Mortgages
Your rate can change at any time and is influenced by the lender’s standard variable rate.
Pros
- Flexible and often no early repayment charges
Cons
- Payments can rise unexpectedly
Tracker Mortgages
Your rate tracks the Bank of England base rate plus a set margin.
Pros
- Transparent link to base rate
- Payments fall if rates fall
Cons
- Monthly costs can increase quickly
Discount Mortgages
A short-term discount on the lender’s standard variable rate.
Pros
- Lower initial payments
Cons
- Rate can still rise if the SVR changes
Other Mortgage Types
- Interest-only mortgages
- Offset mortgages
- Cashback mortgages
- Joint mortgages
- Capped rate mortgages
These are usually more suitable once you fully understand the risks involved.
Should First Time Buyers Use a Mortgage Broker?
Using a broker is not required, but it is usually recommended.
A good broker:
- Understands lender criteria
- Knows which mortgages you are most likely to be accepted for
- Can access deals not always available directly
- Helps with paperwork and lender communication
Some brokers charge fees. Others are paid by lenders. Always confirm this upfront.
First Time Buyer Mortgage Schemes
Several schemes exist to help first time buyers get on the property ladder.
First Homes Scheme
- 30% to 50% discount on market value
- England only
- Income cap of £80,000 (£90,000 in London)
- Mortgage must cover at least 50% of the discounted price
- Maximum price after discount: £420,000 in London
The discount remains when you sell.
Deposit Unlock
- Buy a new build with a 5% deposit
- Properties up to £750,000
Deposit Boost and Family Support
Some schemes allow developers or family members to contribute an additional percentage toward your deposit, reducing how much you need to borrow.
The Mortgage Application Process Explained
| Stage | Typical Time |
|---|---|
| Finding a mortgage | 1 to 3 days |
| Mortgage in principle | Within 24 hours |
| Full mortgage application | 3 to 6 hours |
| Lender assessment | 1 to 2 weeks |
| Mortgage offer issued | 2 to 4 weeks |
Once you have a mortgage offer, you can proceed to exchange contracts and completion.
Final Thoughts
Mortgages for first time buyers can feel overwhelming, but the process becomes much clearer when broken down step by step. Understanding your budget, deposit, mortgage types, and available schemes puts you in a strong position before you ever make an offer.
Preparation, realistic budgeting, and professional advice can save you thousands over the lifetime of your mortgage and help you buy your first home with confidence.
