First Time Buyer Mortgages
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Who qualifies as a first time buyer?
Someone who hasn’t owned a property anywhere in the world before will be a first time buyer. You can only be a first time buyer once.
However, you could be classed as a first time buyer with some lenders if you haven’t owned a property in the last three years. While an individual lender might class you as a first time buyer, you’d still be seen as a second time buyer for things like Stamp Duty.
Is there an age limit on being a first time buyer?
Nope! You can be a first time buyer at 21 or at 51. Age doesn’t determine whether or not you are a first time buyer.
I’m a first time buyer but my partner isn’t – does that affect things?
You can still buy together.
Some schemes might need both of you to be first time buyers to qualify, though, so you’d miss out on those. You could still get a Lifetime ISA to help towards the deposit, but your partner couldn’t.
You also wouldn’t be able to claim the Stamp Duty exemption for first time buyers; you’d both have to be first time buyers to do that.
How do first time buyer mortgages work?
A typical repayment mortgage works in exactly the same way as a loan: you borrow a set amount from a lender, over a defined period of time (known as the term). Each month you make a payment until the entire amount has been repaid.
Banks won’t lend you money for free – you can’t borrow £200,000 and expect to pay £200,000 back. In order for them to make money, and to make it worth their while to lend, banks charge interest. On a repayment mortgage, your monthly payment consists partly of interest with the remainder going towards repaying what you owe. Every month the total amount you owe the bank drops.
If you make all of your payments in full and on time, you’ll pay the bank back everything that you owe them plus the interest they have charged. The house will then be completely yours.
This is the standard method of borrowing to buy a house that you will live in.
Interest-only mortgages
With interest-only mortgages, however, you borrow a set amount from the bank over a defined period of time. Each monthly repayment consists purely of interest charged by the bank. The amount you have borrowed is not being paid back each month.
Instead you have to prove that you will have the money at the end of the mortgage term, which could be years away. This can be through things like pensions and investments.
You also usually need a significant level of deposit and a high income (circa. £100,000 a year, though there are exceptions) before lenders will even consider an application from you on an interest-only basis.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Do you have a question?
Can I get a mortgage as a first time buyer?
Assuming that you receive an income, don’t have a lot of debt, and don’t have any missed payments or defaults against your name, you should be able to get a mortgage. There are mortgages available for people with some bad credit, too. Every application, however, is assessed individually.
When making an application, a lender will look at your employment history and whether you can afford the repayments. They will also consider personal details such as age and credit score, as well as details of the property and mortgage. Every lender has different criteria and will use their own credit scoring system.
While credit scoring systems can be complex, this also means that even if you have been turned down for one mortgage, you can apply with a different lender and potentially see a different result.
We can help you determine which lenders may be suitable for your current situation.
Can I get a first time buyer mortgage with bad credit?
Quite possibly, yes.
It depends on what the bad credit is, and when it happened. Check your credit report if you’re unsure.
The older the bad credit is, the less likely it is to have an impact.
You might need a bigger deposit than someone who hasn’t got bad credit, however, as you’re seen as higher risk by lenders.
Do I get help as a first time buyer?
There are special schemes available to help first time buyers get on the property ladder. Some aren’t exclusively available to first time buyers, so you might face increased competition in some cases.
We know it can be difficult for first time buyers like you to find the information you need in an easy to understand format. There is lots of specialist wording in the mortgage world that might not make much sense when you’re just starting out on your home-buying journey. We’re available to answer any questions you might have, no matter how silly you think it might be. Contact us over the phone, via email, or through WhatsApp, and we’ll get back to you as soon as possible.
What deposit do I need?
Most lenders want a deposit of at least 5% of the purchase price. The exact level of deposit needed will depend on your situation. For example, if you have bad credit, you might need a bigger deposit.
The more deposit you put down, the better.
It can be possible to get a mortgage with no deposit, although these types of mortgage are few and far between.
Unsure if you can get a mortgage?
Contact us now for a no-obligation chat.
How much can I borrow on a first time buyer mortgage?
That depends entirely on your personal circumstances.
Lenders undertake a thorough assessment of your income and expenditure in order to reach a figure. They factor in things like student loans, childcare, and maintenance payments as well as credit cards and personal loans.
Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible. If your case doesn’t fit with one lender, it might fit with another.
This is where a mortgage broker like us comes in handy. Our job is to know the lenders’ criteria and to match you up with someone who will consider you. We can compare deals from dozens of lenders, too, so you know you’re getting the best possible mortgage for you.
What will my monthly mortgage payments be?
Your monthly repayments will vary according to the total amount you borrow, the term of your mortgage, fees accrued, and the interest rate. Twenty-five-year mortgages used to be considered standard, and while this term does remain popular, it is possible to borrow over a longer or shorter period, which will increase or decrease your repayments.
Use our mortgage calculator to work out repayments with varying borrowing amounts, terms, and interest rates.
Do first time buyers pay Stamp Duty?
First time buyers don’t pay Stamp Duty on properties worth less than £425,000. Anything over this price will mean some Stamp Duty is payable.
If you are buying with somebody who isn’t a first time buyer, you will need to pay the normal amount of Stamp Duty.
What other costs do I need to budget for?
As well as your deposit, you’ll need to have funds available for solicitors. The exact cost will depend on the firm you choose and the price of the property you’re buying.
You should also consider paying for a survey. Although the mortgage lender will do a basic valuation, this is just to check that there are no issues that would make the property unsuitable security. It isn’t very in-depth and you typically won’t get a copy of the report.
You might also need to buy furniture for your new house, so make sure you’ve got enough to at least cover the essentials, so you can actually live there!
Once you’ve got the keys, you’ll be responsible for all the monthly bills and maintenance of the property. If anything goes wrong, it’s up to you to fix it. We recommend keeping an emergency fund of at least three months’ net pay to cover things like this. You can use our budget planner to see where your money might go each month.
How can The Mortgage Store Chorley help first time buyers?
The Mortgage Store Chorley specialises in helping first time buyers like you get a foot on the property ladder.
We aren’t tied to one bank or building society, and we can help find the ideal mortgage product for your circumstances. We cover all the special schemes, like Deposit Unlock, First Homes, Own New, and Shared Ownership.
Speak to our expert advisor today and start your journey towards home ownership.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
