Apr 5, 2018

So your thinking about buying your first house, probably even seen your dream property but the only hurdle left to cross now is the getting a suitable mortgage in place. If you have never done this before, finding the right mortgage for you can be a headache. Many people will go straight to their bank rather than finding a deal.

But look no further, as we explain the best way to find the perfect mortgage for a first-time buyer.

Where to begin

Before committing yourself to looking at all the properties available on the market, it is a good idea to arrange a mortgage in principle – which is a promise from your lender that they will lend you the money to buy your house. Having a mortgage in principle will outline your affordability and will subsequently direct your property search and allow you to submit suitable offers.

With interest rates at an all-time low and mortgage rates cheaper than ever, there is no time like the present for first-time buyers to confidently take their first step on the property ladder. Although house prices are still competitive, the low interest and cheap mortgage rates mean that paying a mortgage could save you money over renting, and you are a homeowner as well.

And following last autumn's budget announcement, first-time buyers don't have to pay Stamp Duty for property purchases up to £300,000 and will pay a flat rate of 5% on any amount between £300-500,000.

Learn more about the government's Help to Buy scheme

The help to buy scheme is a government backed and approved scheme that has allowed many first time buyers onto the property ladder with a deposit of only 5%. Its widely available and the requirements are basic as well.

5% deposit mortgages

Fast forwarding on from the 2007 economic crash, it became difficult to secure a mortgage with anything less than a 20% deposit. However, as time has gone on the government has put into place and combatted this requirement.

There are leaders out there that will allow you to take out a mortgage with just a 5% deposit, different to the Help to Buy Scheme. All lenders are different and require you to fulfill different needs and it is therefore important any first-time buyer understands the varying rules and criteria.

The Bank of Mum and Dad

The number one bank in every household and ironically on the UK’s top 10 lenders in 2017. The bank of Mum and Dad has seen a rise in the number of parents helping their children buy that all important first house. There has been a huge rise in the number of lenders offering mortgage options that include parental assistance.

The joint borrow sole proprietor option is exactly what it says. It’s where you can borrow money jointly with your parents as security but their names will not appear on the title deeds. Although you have more borrowing power, it comes at the price of having to pay higher stamp duty rates as your parents will be owning another home.

Schemes are also available where lenders will use the parent's property equity as security for buying a new home, as opposed to first-time buyers needing a cash deposit.

Consider buying with a friend or family member

You can also consider the option of buying a house with a friend or family member(s). This can help you secure your dream home a lot quicker than doing it yourself, especially in areas of high asking prices.

Read our guide on joint ownership here.

Don't give up at the first difficulty

It can be tricky to secure a mortgage if your financial situation is self-employed, freelance, or anything other than a straight-forward employee. Don’t get disheartened if a bank turns you down for finance, as there are many lenders who specialise in these sorts of situations who will be able to assist you.

Similarly, a first-time buyer may consult an online calculator or speak to their bank directly to be offered a set amount of money, without appreciating that lenders all work to very different models. Other lenders could offer more and some less.


We have some great mortgage and financial advisers to hand, drop us an email or give us a call on 0121 448 5190 to arrange an appointment.