Do I Count as a UK First-Time Buyer if a Joint Applicant Has Owned a Home?
Unfortunately not, most lenders won’t offer a first-time buyer mortgage to an applicant where one party has owned a residential property before.
That said, there are schemes and initiatives in addition to first-time buyer mortgages that you could use, such as a Lifetime ISA.
How Does a First-Time Buyer Mortgage Differ?
Buying a home as a UK first-time buyer is a little different than buying a new home and selling a previous property or remortgaging, because you won't have any equity. For first-time buyers, that means you need a deposit, which is a down payment against the purchase value.
First-time buyer mortgages may have lower deposit requirements, but it is highly unlikely you would be able to borrow close to 100% of the cost as a UK first-time buyer.
The higher the deposit you can put down, the better a deal you are likely to get, and the more first-time buyer mortgages you will be able to choose between since larger deposits pose less of a risk to the lender.
First-Time Buyer Mortgage Illustration
As a case study, let's assume two people want to purchase a home and have saved up a deposit of £20,000. They have found a great property for £200,000 and want the most affordable first-time buyer mortgage possible.
The deposit is 10% of the property value, so they need a first-time buyer mortgage for 90% - this is the Loan to Value or LTV.
Working with a capable broker, they have a reasonable chance of getting a 90% first-time buyer mortgage, but a lot depends on their income and employment situation.
Lenders look at your annual earnings and will lend up to around four to 4.5 times that value on a first-time buyer mortgage. If the couple earns £40,000 between them, they can borrow roughly £160,000 to £180,000 on a first-time buyer mortgage.
This example is a basic overview of how income assessments work for first-time buyers, but it's essential to understand that your first-time buyer mortgage will depend on more than the deposit you have and what the property is worth.
Choosing the Best Mortgages for First-Time Buyers
Once you have a good idea of your deposit and maximum first-time buyer mortgage value, you then need to consider where to apply. You have two primary options – either researching all prospective banks and lenders that offer mortgages for first-time buyers or working with an independent broker.
As a broker, Revolution works with clients to assess their circumstances and recommend the best mortgages for first-time buyers that align with their borrowing needs.
That can include:
- Negotiating on your behalf with your selected first-time buyer mortgage lender.
- Suggesting first-time buyer mortgage lenders who are likely to approve your application.
- Comparing the best mortgage for first-time buyers based on costs, charges and interest rates.
Our goal is to make your first-time buyer mortgage as competitive and low-cost as possible, assessing a huge range of factors that are important for first-time buyers, such as admin fees, exit penalties and lender criteria.
Because we are whole-of-market and independent, we can scour thousands of potential products designed for first-time buyers and help you make informed choices about how to proceed.
Important Information You Should Know as a UK First-Time Buyer
There are countless mortgages for first-time buyers and lenders and terms to choose between, so it helps to know the terminology and questions a lender will ask you.
Mortgage Interest on a First-Time Buyer Mortgage
The interest is the amount, calculated as a percentage, the lender charges you for your loan. Higher interest rates can make some first-time buyer mortgages unaffordable, so it’s vital you do your sums and calculate the monthly cost accurately.
Mortgages Terms for a UK First-Time Buyer
The term is the length of time your first-time buyer mortgage will run for. A standard mortgage for first-time buyers will run for 20 or 25 years but could be much longer or shorter.
Types of First-Time Buyer Mortgages
Most residential properties are purchased with a repayment mortgage. As a UK first-time buyer, an interest-only mortgage is less likely to be suitable and means you pay solely the interest every month, with the full capital amount still to be repaid when your first-time buyer mortgage reaches the end of the term.
Calculating Deposit Requirements for a First-Time Buyer Mortgage
Most lenders with products for first-time buyers will expect a minimum deposit of 10%. That means you can potentially borrow up to 90% of the purchase price through a first-time buyer mortgage.
However, if you have a larger deposit, as a UK first-time buyer, you will be able to negotiate lower interest and more competitive contract terms.
In our illustration above, the couple has £20,000 as a deposit towards their first home. If they had an additional £10,000 and boosted their deposit to £30,000, they would be looking to apply for a first-time buyer mortgage at 85% LTV, which is a much easier proposition.
Borrowing less on a first-time buyer mortgage means your monthly repayments will be lower, and your charges and interest rates will also be more favourable.
Expert Advice on Buying a Home as a UK First-Time Buyer
Please review our FAQs below if you’d like more information about the best mortgages for first-time buyers. Alternatively, please contact the Revolution Finance Brokers team at your convenience for independent, professional advice on finding the right first-time buyer mortgage for you.
