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Last Updated: 8th August 2023
A first-time buyer mortgage is a specialised home loan tailored for individuals venturing into the property market for the very first time. It’s designed to make homeownership more accessible by offering unique benefits and incentives.
Unlike regular mortgages, first time buyer mortgages often come with lower deposit requirements, making it easier to get started on the property ladder. This reduced upfront cost can be a significant advantage for those saving for their first home.
First time buyer mortgages also open the door to various government schemes and support, which can provide additional financial assistance. These schemes aim to ease the financial burden associated with purchasing a property, making the dream of homeownership more achievable.
First time buyer mortgages offer a range of advantages and incentives that make them a smart choice for aspiring homeowners. Understanding these benefits can help you make an informed decision when embarking on your homeownership journey.
Lower Deposit Requirements: One of the most significant benefits of first time buyer mortgages is the potential for lower deposit requirements. Traditional mortgages often demand sizeable upfront deposits, which can be challenging for first time buyers. With a first-time buyer mortgage, lenders may be more flexible, allowing you to get started with a smaller down payment.
Government Schemes and Support: First time buyers often have access to various government-backed schemes and support. These initiatives can provide financial assistance, reduced costs, or shared equity, making it easier for you to step onto the property ladder.
Competitive Interest Rates: Many first time buyer mortgage deals come with competitive interest rates, helping you save money over the life of your loan. Lower interest rates can result in more manageable monthly repayments, allowing you to budget more effectively.
Specialised Mortgage Products: First time buyer mortgages are specifically designed to cater to the needs of new buyers. These specialised products may come with more flexible terms and features tailored to your unique circumstances.
Stamp Duty Exemptions: In some cases, first time buyers may be eligible for stamp duty exemptions or reductions. This can lead to significant savings during the property purchase process.
Navigating the world of mortgages as a first time buyer can be overwhelming, but understanding the various types available is essential to making the right choice. Here are three common types of first time buyer mortgages to consider:
Fixed-Rate Mortgages for First-Time Buyers: A fixed-rate mortgage offers stability and peace of mind for first time buyers. With this type of mortgage, the interest rate remains constant throughout an initial period, typically ranging from two to five years. This means your monthly repayments remain predictable, unaffected by fluctuations in the interest rates during the fixed period. It’s an excellent option if you prefer budget certainty and protection against potential interest rate increases.
Tracker Mortgages and Their Benefits: Tracker mortgages are tied to the Bank of England’s base rate, which means the interest rate fluctuates in line with changes in the base rate. For first time buyers, this can be advantageous when the base rate is low, as it can lead to lower mortgage repayments. However, it’s essential to be prepared for potential rate increases, which could impact your monthly payments. Tracker mortgages often come with an initial period where the interest rate is fixed at a margin above the base rate before transitioning to tracking the base rate.
Shared Ownership Schemes for First Time Buyers: Shared ownership schemes enable first time buyers to purchase a percentage of a property (usually between 25% to 75%) and pay rent on the remaining share. This option is particularly helpful for buyers who may not be able to afford a full mortgage on their desired property. Over time, buyers can increase their ownership by buying additional shares, a process known as “staircasing.” Shared ownership can be an excellent way for first time buyers to step onto the property ladder with a more affordable initial investment.
With a Mortgage Experience adviser on your team, you can sit back, relax, and make yourself a cuppa, safe in the knowledge that we will be doing all the heavy lifting to find you a suitable mortgage with the best rates available. This gives you more time to pack, and well, do the actual physical heavy lifting (should you wish) as you move into and enjoy your new home or the financial benefits of your remortgage.Get In Touch
The minimum deposit required for first-time buyers can vary depending on several factors, including the mortgage lender, the property’s value, and your financial circumstances. Generally, most lenders require a minimum deposit of around 5% to 10% of the property’s purchase price. However, putting down a larger deposit, if possible, can offer several benefits, including potentially access to more favourable mortgage rates and increased chances of mortgage approval.
As a first-time buyer, saving for a deposit is a crucial step in the journey towards homeownership. The deposit is a lump sum of money you need to put down when purchasing a property, and it plays a significant role in securing a mortgage.
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