Preparing to Purchase First-Time Buyer Houses
Once you have confirmed that you are an authentic first-time buyer, you should download your credit report from all of the big three UK credit bureaus – this allows you to check whether there are errors or defaults, for example, on your report which will impact your ability to secure the best mortgage first-time buyer rates.
It can be very useful to assess your credit score before you apply since errors can be removed, or you might decide to wait for older credit issues to be removed from your file, which takes six years, to improve your prospects as a first-time buyer.
Every first-time buyer will need a deposit unless they are applying for a guarantor mortgage or similar. The higher your deposit, the more eligible you become for the best mortgages first-time buyers.
Lenders prefer applicants with a deposit of at least 10% and ideally 15% and reserve the very best mortgage rates for first-time buyers they consider a low risk.
Calculating the Deposit Necessary to Get the Best Mortgages First-Time Buyers Rates
Your deposit can make a considerable impact on your eligibility for the best mortgage first-time buyer products because the more the lender is providing against the property value, the greater the risk they will lose out if they were to end up in a repossession scenario.
Deposits are expressed as a percentage of the purchase price or Loan to Value, so a first-time buyer purchasing a home for £250,000 will need a £12,500 deposit as 5% or £25,000 as 10%.
The best mortgages first-time buyers are normally available at a Loan to Value of 80% or less, so a deposit of 20% or more, and a first-time buyer with a larger deposit will have a greater number of lenders and products to choose between.
A first-time buyer can get a mortgage with a deposit of 5%, but it's likely their interest rates, and charges won't be the best mortgage rates for first-time buyers on the market.
Support Schemes to Help a First-Time Buyer
First-time buyer houses may qualify for varied schemes and initiatives intended to either make it easier to buy as a first-time buyer or easier to access the best mortgage first-time buyer rates.
- First Homes provides a 30% discount on new build properties and is open to first-time buyer applicants with a low income or in other categories such as key workers.
- The mortgage guarantee scheme allows a first-time buyer to purchase with a deposit of 5%, with a guarantee from the government against the loan.
- A Lifetime ISA is a savings option where a first-time buyer can deposit up to £4,000 into their savings account and earn £1,000 every year in interest.
The best mortgages first-time buyers products won’t necessarily be available to a first-time buyer using any of these schemes, and lenders will still need to check whether a first-time buyer passes their eligibility check and affordability criteria.
Choosing the Right Type of First-Time Buyer Mortgage
Your access to the best mortgage rates for first-time buyers, and the repayments you make each month, will also depend on the type of first-time buyers houses you wish to buy or the type of mortgage product you apply for.
First-time buyer mortgages can be:
- Fixed-rate first-time buyer mortgages, which have a fixed interest rate for up to five years. These products often have some of the best mortgage rates for first-time buyers, but at the term end, you may need to remortgage to avoid ending up on the lender's Standard Variable Rate (SVR).
- Tracker mortgages have a changeable interest rate based on the base rate, so a first-time buyer might find their mortgage payment varies monthly.
- Discounted first-time buyer mortgages work like tracker mortgages but with a fixed discount underneath the SVR, normally for up to five years.
- Offset mortgages allow a first-time buyer to use savings, or a family deposit, to reduce the interest charges, which are calculated on the outstanding loan, less the value deposited in an account with the same bank.
We recommend seeking independent advice before choosing the right first-time buyer mortgage since each has pros and cons.
Revolution Finance Brokers works with countless first-time buyer applicants looking for the best mortgage rates for first-time buyers and can advise on the suitable lenders, products and mortgage types to help you move forward with buying first-time buyer houses.
