First-time buyer mortgages

What is a first-time buyer mortgage?

A first-time buyer mortgage is aimed at people who have never owned a property before, either in the UK or abroad, and often comes with lower deposit requirements or dedicated government-backed schemes.

Lenders treat first-time buyers slightly differently to home movers, since there's no existing property to sell and, usually, a smaller deposit and less established credit history to assess.

Many high-street lenders offer 95% loan-to-value deals specifically for first-time buyers, meaning a 5% deposit can be enough to get started.

How does a first-time buyer mortgage work?

You save a deposit, get a mortgage in principle to establish your budget, and then apply formally once you've had an offer accepted on a property.

Lenders assess your income, outgoings, credit history and the size of your deposit to decide how much you can borrow and at what rate, usually offering a discounted rate at higher loan-to-value bands for first-time buyers specifically.

Here's a fictional example:

What schemes are available to first-time buyers?

Am I ready to buy my first home?

You're likely in a good position if:

1. 1

   You have a stable deposit

   Even 5% is enough for many schemes, provided the rest of your finances stack up.

2. 2

   Your income is steady

   Lenders want to see reliable earnings, whether employed or self-employed with a track record.

3. 3

   You've checked your credit file

   Sorting out any errors or building a thin file in advance can significantly improve the rates you're offered.

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

Lenders typically look for:

• A deposit: From 5% of the purchase price, though 10-15% often unlocks noticeably better rates.

• Proof you've never owned a property: Required to access first-time buyer specific deals, schemes and Stamp Duty relief.

• Affordability: Income, existing debts and regular outgoings such as subscriptions and childcare are all assessed.

• A reasonable credit history: You don't need a long history, but missed payments or high existing debt will limit your options.

• Employment or trading history: Usually at least three months in a role for employees, or two to three years of accounts if self-employed.

How to compare first-time buyer mortgages

Look past the headline rate and check these five things:

1. 1

   Initial rate vs the follow-on rate

   A cheap two-year fix can revert to a lender's standard variable rate of 7% or more once it ends, so know the exit point before you sign.

2. 2

   Fees, not just the rate

   A lower rate with a £1,999 product fee can cost more overall than a slightly higher fee-free deal, especially on smaller loans.

3. 3

   Overall cost over the deal period

   Compare the true cost of the initial period — rate, fees and any cashback combined — rather than the rate in isolation.

4. 4

   Early repayment charges

   Fixed and tracker deals typically lock you in with charges of 1-5% of the balance if you remortgage or overpay heavily before the term ends.

5. 5

   Flexibility

   Look for free overpayment allowances (usually 10% a year), porting rights if you move home, and payment holiday options.

First-time buyer mortgage pros and cons

Should I buy now or keep saving for a bigger deposit?

A bigger deposit unlocks cheaper rate bands, often with a noticeable drop at 10%, 15% and 25% loan-to-value thresholds, so a few more months of saving can pay off.

But house prices and rents can rise while you wait, meaning the target sometimes moves as fast as your savings — it's worth modelling both scenarios before deciding.

If a 95% mortgage gets you onto the ladder at an affordable payment today, it can make sense to buy now and remortgage onto a better rate once you've built more equity.

What happens if I can't keep up mortgage repayments?

Missing payments on your first mortgage is reported to credit reference agencies and can ultimately put your home at risk, since the property is used as security for the loan.

Contact your lender as soon as you think you'll struggle. Under FCA rules, lenders must treat customers in financial difficulty fairly and can often offer a temporary reduced payment, a term extension or a short payment holiday.

Free, independent guidance is available from MoneyHelper and Citizens Advice, and speaking to your lender early keeps far more options on the table than waiting until arrears build up.

What if I'm not ready for a full mortgage yet?

Other routes onto the property ladder include:

FAQs

About this guide

Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.