First Time Buyers

If you've never bought a home before, the process of getting a mortgage can seem rather daunting. One of the primary concerns for new buyers is saving up a sufficient deposit to buy their first home.

Fortunately, most mortgage lenders work on the assumption that first time buyers won’t have a particularly substantial deposit, and therefore offer high loan to value (LTV) mortgages deals. With the introduction of the Help to Buy scheme, first time buyers could find mortgages requiring a deposit of as little as 5% of the property value.

You can use our free mortgage calculator to work out how much you could borrow as a first time buyer, then use the Best Buy Tables to compare some of the best first time buyer mortgage rates on the market.

How much can I borrow?

In calculating how much you can borrow the lender will apply a maximum amount you can borrow called the loan to value of the property (LTV).

As a first time buyer, you may be eligible for a Help to Buy Mortgage which offers mortgages with an LTV of up to 95%, meaning that you only need to find a 5% deposit in order to get onto the housing ladder.

For more information see Help To Buy Mortgage Advice

Mortgage Costs for First Time Buyers

It is important that you budget for all the costs that you might be faced with as a first time buyer. Buying your first home involves more than just the deposit and the mortgage repayments, so think carefully about your overall budget when selecting potential mortgage deals. The costs involved in a mortgage may include:

Mortgage arrangement fee – Many mortgage lenders will charge you an arrangement fee, which covers the administration costs of processing your mortgage. You will often be given the option of adding this fee normally have the option of adding this fee to your mortgage but this will increase your cost of borrowing over the mortgage term. Bear in mind that, in some cases, this fee is non-refundable even if the house purchase falls through.

Mortgage broker fee - If you use a mortgage broker to help arrange your mortgage, you may be charged a fee for their services. Mortgage account fee – This fee will be applied by the lender when you first take out your mortgage to cover set up, maintenance and closing down costs.

Valuation fee – This fee is charged by the mortgage lender to have the property valued to in order to check that it is worth the mortgage amount. The cost of this fee will vary according to which lender varies according to lender and purchase price.

Surveys – Before you buy you will need to have a property survey done. The type of survey required will vary depending on the type and value of the property you are considering buying. You may have to have several surveys done on various properties before you buy, so make sure you allocate enough money for this expense.

Legal fees – Some mortgage lenders will pay these for you or contribute towards them, provided that you use a solicitor from their approved list. If you want to choose your own conveyancing provider, you will need to budget accordingly.

Higher lending charge - If you are borrowing a high loan to value the lender may decide they wish to insure the possibility that you may need to sell your home and this results in a loss.

Stamp duty - Buy a property for more than £125,000 and you're likely to have to pay a percentage of its price to the taxman. The easy way to find out how much is to use our Stamp Duty Calculator.

Insurance costs - as part of your mortgage you may be encouraged to take out insurance either by a broker or the lender to cover buildings insurance and other optional insurance such as mortgage life insurance.


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