first-time buyers usually have a wealth of options from government schemes to private market schemes to get on the property ladder. Choosing the right mortgage broker to assist you in assessing all your mortgage options will be key to ensuring you get on the property ladder in the most affordable way.

What is the role of a Mortgage broker for first-time buyers?

A Mortgage broker will look to analyse your current incomings and outgoings to determine what your true mortgage affordability is.

Your first-time buyer mortgage broker should then look to see what first-time buyer government schemes and private market mortgage schemes you may be eligible for as these may reduce your mortgage deposit requirement or reduce the property price or a similar saving.

Once your mortgage broker has done this they will then look to see what first-time buyer mortgage products you are eligible for taking into account your financial circumstances, needs and plans for the future.

Your mortgage broker will then present this to you in what is known as a key facts illustration.

This may contain a summary of all the products your mortgage broker is advising you on and how they all work together.

If everything looks good, your first-time buyer mortgage broker will then seek your permission on which route you want to go.

Once a decision has been made your mortgage broker will then look to get a mortgage in principle from the mortgage lender. This will let you know how much the mortgage lender is willing to lend to you based on your income and any other government scheme you are eligible for. Mortgage lenders have various lending criterias and your first-time mortgage broker will take this into account when looking for an appropriate mortgage lender. As a guide a mortgage lender will usually offer you a mortgage of 4 times your income.

If you are applying for your mortgage with a government scheme your mortgage lender may have to see what is know as an authority to proceed letter prior to offering you a mortgage. The authority to proceed letter is given by the help to buy schemes and other government schemes once you have completed their property information form.

A mortgage in principle will usually be valid from between 60 to 90 days. Once you have a mortgage in principle you will find that most real estate agents and home sellers will begin to take you much more seriously as you can actually afford the house they are looking to sell.

First-time buyer mortgage FAQs

Below we will answer some of the frequently asked questions first-time buyers have from a first-time buyer mortgage brokers perspective.

Do I need a first-time buyer mortgage broker?

This is totally up to you but due to the complexities involved in getting a suitable mortgage, It is usually better to get a first-time buyer mortgage broker to assist you as the whole process will likely be new to you and may seem overwhelming. You are also seeking out a huge financial commitment and it is always better to place the liability on the mortgage broker rather than yourself.

Your mortgage situation could further be complicated and difficult if you are:

  • Self employed
  • A director
  • Have bad credit
  • Live overseas temporarily
  • Recently moved to the UK
  • Don’t have sufficient mortgage deposit

What is the home buying process?

The home buying process is pretty straightforward and your first-time buyer mortgage broker will be able to assist you throughout this process.

The home buying process goes like this:

Get a mortgage in principle: this lets you know what you can afford and what you will have to pay for your mortgage.

Find a property: You should find a property within your budget and submit an offer to buy the property.

Instruct a home valuation: It is important you instruct a home valuation because if the house is valued way lower than the advertised price it is likely the mortgage lender will only offer you a mortgage for the properties value. This may mean you will have to put a bigger mortgage deposit down to cover the deficit. There are different types of home valuation reports. Ensure you choose the one which fits your needs. Some valuations will come with a full home survey, some won’t.

Apply for your mortgage: Your first-time buyer mortgage broker will then apply to the mortgage lender for a formal offer. Your mortgage lender will ask to see the valuation documents and if everything is fine they could produce an offer within hours but at the most within 10 to 4 days.

Instruct a conveyancer: Your conveyancer will do the legal work on your home to ensure that the home you are buying is fit for purpose and that there aren’t any legal problems with it. Your solicitor will conduct various searches including local authority searches to ensure they aren’t going to build a motorway through the back garden anytime soon!), mining area searches, chancel searches to see if the house is part of a parish area. Conveyancers could cost anywhere between £200 to £3,000 depending on the property value.

Once everything is drawn up and ready you will then be able to exchange contracts. The two conveyancers involved will set a date for completion which is when you will receive the keys and be able to move into your new home.

What does buying off plan mean?

For those of you who chose to buy new build houses offered through the government scheme or any other property developer you may come across the term “Off plan”. This simply means that the property you want to buy hasn’t been built yet.

Buying off plan means you will confirm everything aside from exchanging on the property. This means you’re not obliged to complete or move into the property but you may lose some of the money you may have already spent on conveyancers, mortgage fees, home valuations( which you may be required to do if the mortgage lender has to extend their offer past their usual terms)

New build properties may take 12 months or longer to complete and your mortgage lender will usually give you a mortgage offer that is valid for 6 months after which you and the property may have to be reassessed at a cost to you.

Some mortgage lenders offer specific off plan mortgages which allow you to continuously extend your mortgage offer as long as your personal circumstances haven’t changed.

What is a contract reassignment home purchase?

In some cases a new build property which was bought off plan will increase in value before the original buyer completes on the purchase.

If this occurs some buyers will look to make a quick profit and offer the property at a price above what they were originally going to complete on it but at a discount to is current market value. This means that anyone who wants to buy this property could potentially buy it at a discount to what they would otherwise pay forit. A good deal for the seller and the buyer.

Buying a house on contract assignment does have some challenges as you may not be able to get a straightforward mortgage with it.

You should consult your first-time buyer mortgage broker for advice on this and seek legal advice if you see fit.

What is the best mortgage for a first-time buyer?

The best mortgage for a first-time buyer is not necessarily with any particular mortgage lender but rather it all comes down to how much you can put down as a deposit and what your total cost will be. If for example you get a first-time buyer government scheme for 15% of your property price and hae a 5% mortgage deposit the mortgage lender may then give you a mortgage with a loan to value(LTV) of 80%. This will may be a good mortgage but not necessarily the best. Your first-time buyer mortgage broker will be able to advise you on what the best mortgage available for you is.

How much deposit do you need for a first-time buyer mortgage?

Forna first-time buyer mortgage you will probably need a mortgage deposit of 5%. You could then get a government scheme for 15 or up to 40% if you are eligible for the governments help to buy scheme. With the average UK house prices a mortgage deposit of between £15,000 and £40,000 for 5% of the property price might be enough as a mortgage deposit. If you can’t afford to buy the home you could possibly use the shared ownership scheme if you are eligible.

How can a first-time buyer get a mortgage?

For a first-time buyer to get a mortgage you will need to get a first-time buyer mortgage broker to see your eligibility for a mortgage you can then check your eligibility for first-time buyer government schemes to see if you could put a smaller mortgage deposit down or get any possible savings on the total cost of the property through schemes such as the help to buy equity loan scheme or the shared ownership scheme. Once you are done here your mortgage broker will give you a mortgage in principle which they they have obtained from the mortgage lender. At this point you can get a mortgage. Just seek advice from your mortgage broker and continue the process.

Can you get 100 mortgages for first-time buyers?

Yes, you can get 100% mortgages as a first-time buyer but you will usually be able to get these through specialist first-time buyer mortgage products such as the offset mortgage: which is where your family members or a family member puts money in a savings account for the first few years of your mortgage rather than you paying a mortgage deposit. There are also guarantor mortgages where a family member puts down some collateral such as their house, cars or valuables down as a guarantee for your mortgage. If you fail to make your mortgage payments or default your guarantor could lose their possessions. Your guarantor should seek independent legal advice before taking out a guarantor mortgage.

How much income do I need to qualify for a mortgage?

The income needed to qualify for a mortgage will depend heaving on the total mortgage you want take out. Most mortgage lenders work out your mortgage affordability based on an income multiple of between 3 and 5 depending on the mortgage lender. Your income will also need to be sufficient to cover your monthly mortgage repayments.

How much of a mortgage can I afford?

The amount of mortgage you can afford will depend heavily on your monthly disposable income as well as your yearly income. Most mortgage lenders will like to see that your current committed expenses are not more than 30% of your current income.

Mortgage lenders will also like to see that your monthly mortgage repayments can fit within your disposable income and leave you room to breathe.

Can I buy a house with no money down?

As mentioned above you will be able to buy a house with no money down but this will require you to have a good credit score and a good mortgage affordability.

In most cases you will need a guarantor to put down some money in a savings account or put some collateral down. The barclays family springboard mortgage and the lloyds help a hand mortgage are two mortgages which allow you to buy a property with no money down.

There are several things you may want to check before buying a house, they include:

  • Damp
  • Japanese knotweed
  • Building work in the local area
  • Bin collection times
  • Distance to prisons
  • Distance to hospitals
  • Check that the electrical work
  • Check that the pumbling works
  • Check that the old owner has paid the final gas meter and water bills
  • Check that the previous electricity bills have been paid
  • Check that the home has a gas certificate
  • Crime rate for the area
  • House price trends in the area
  • The current furniture in the house
  • The council tax for the area
  • The cost for home insurance
  • Check that the roofing is fine

What do I need to know as a first-time home buyer?

There isn’t much more to know outside of what we have covered in this blog. As long as you have an experienced mortgage broker for first-time buyers then you should be fine.

  • Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
  • Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy- allows you to buy your home at a discount price.
  • Preserved right to buy- same as above.
  • Right to acquire- same as above.

You may also be able to use a host of mortgages with the help of your family.

They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.