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First-time buyers benefit from various incentives offered by lenders. There are also schemes to help make it more affordable for you to buy your first home. To ensure you qualify, you’re considered to be a first-time buyer if:

You’ve never owned a residential property in the UK or abroad, either with or without a mortgage
You haven’t inherited a property. Even though you may have inherited one rather than buying one, this still counts as owning a home so removes your first-time buyer status.

You are still regarded as a first-time buyer, however, if you have owned commercial property with no residential space attached to it. If you want to buy a property with someone else who currently owns a residential property or has previously owned one, you may not be eligible for some of the perks available to first-time buyers.

Buying a property is likely to be the biggest purchase you’ll ever make. Unless you can afford it outright, you’ll need a mortgage to cover the cost. There are numerous mortgage types to choose from and your dedicated mortgage broker will explain them all to you clearly. This will help you to narrow down the choices and find one that best fits your needs. To start with, you need to decide between a repayment and an interest-only mortgage.

Repayment mortgage

When you opt for a repayment mortgage, your monthly payments repay some of the loan as well as the interest. By the end of your mortgage term, such as 25 years, you will have completely repaid the loan and own your property outright. This makes a repayment mortgage the most popular choice.

Interest-only mortgage

For this type of mortgage, you only pay the interest due each month. Whilst this might appear tempting as the monthly repayments will be lower, none of the loan amount is repaid throughout your mortgage term. This means that the entire loan has to be repaid when the term ends. Unless you have the means to do this, you will more than likely have to sell your property to repay the loan.

Next, you need to decide whether you prefer a fixed or variable rate. A fixed rate ensures you know exactly how much you’re paying each month. This is ideal if you prefer to limit your risk. A variable rate, on the other hand, fluctuates. You can benefit from making lower monthly payments if the rate drops. However, you need to be confident that you can cover higher interest rates should they increase.

Fixed rate mortgage

You can pay a fixed interest rate for an agreed period at the start of your mortgage, such as 2, 3 or 5 years. This gives you peace of mind that your payments won’t go up if the Bank of England increases the interest rate. It also helps you with budgeting as you know exactly what to pay each month. Once the agreed period ends, your rate converts to the lender’s standard variable rate (SVR). This is usually higher so we recommend that you look for a new mortgage deal a few months before the end of the fixed rate period to avoid having to pay a higher amount. You may have to pay early repayment charges if you change to a new deal, depending on your lender.

The downside to a fixed rate mortgage is that you won’t benefit from lower payments if the interest rate drops. A fixed rate mortgage also tends to have a higher interest rate than a variable rate mortgage.

Variable rate mortgage

With a variable rate mortgage, your monthly interest payments can increase or decrease throughout your mortgage term. It’s not recommended to pay a lender’s standard variable rate. This rate is usually high compared with other rates and each lender sets and adjusts their own SVR. Aside from this type of variable rate mortgage, there are several others to consider. The main ones are:

Discounted rate mortgage

To encourage you to select a mortgage that has their SVR, lenders offer discounted rates for a set term, which is usually between 2 and 5 years. After this period, the rate switches to their higher SVR. Although the low rate and cheaper monthly repayments may seem appealing, the discounted rate is linked to the lender’s SVR. This means your payments can still increase if the lender increases their SVR.

Tracker mortgage

This type of mortgage tracks a particular interest rate, which is usually the base rate set by the Bank of England, and you pay a fixed percentage on top of that rate. As the base rate increases or decreases, so do your payments. A minimum rate that your interest rate cannot fall below is sometimes set by lenders, which is known as a collar rate. There isn’t normally a limit to how high your rate can go, though. Tracker rates are either available for an introductory period, such as 2 to 5 years, before reverting to the SVR or you can choose to have the tracker rate for the entire mortgage term.

Capped rate mortgage

With a capped rate mortgage, the interest rate can increase or decrease in the same way as other variable rate mortgages. The difference is that, as the name suggests, a cap is set. This means the rate you pay cannot go higher than this. This type of mortgage allows you to benefit from lower payments when the rate drops but have peace of mind that your payments won’t exceed a certain amount when the interest rate increases. The interest rate for a capped rate mortgage is generally higher than for a discounted rate or tracker mortgage because you benefit from its security.

Offset mortgage

An offset mortgage, which is linked to your savings account, can have either a fixed or variable interest rate. The balance of your savings is offset against your mortgage amount, reducing the amount of interest you have to pay. You won’t earn any interest on your savings but your savings are taken into account when calculating the interest payable. For example, if you have a mortgage of £300,000 for your first home and savings of £15,000, you only have to pay interest on £285,000.

This flexible mortgage allows you to reduce your monthly payments or shorten your mortgage term. No tax is payable on your savings as you are not earning interest on them. You can also withdraw funds from your savings account when you need to. Due to its flexibility, an offset mortgage usually has a higher rate of interest. Before opting for an offset mortgage as a first-time buyer, it’s worth considering whether those savings are better put to use as a deposit.

For your first mortgage, you’ll need to save up for a deposit. Lenders usually expect you to pay a deposit of at least 10% of the property’s value. There are some 95% mortgages available with just a 5% deposit but the more deposit you can save, the better mortgage deal you will get.

Lenders offer more competitive rates for bigger deposits, which can make your monthly payments lower. The lower the amount you need to borrow compared with the property’s value – known as the loan-to-value (LTV) ratio – the more attractive you become to the lender. As such, the more deals will become available to you. Generally, better deals are available at specific LTV thresholds with new deals being available at each 5% threshold. Therefore, if you can save enough to push your deposit to the next 5% threshold, you should expect to be offered more competitive rates.

If you’re struggling to save an adequate deposit, there are schemes available to help you.

There are different schemes available to help you get your foot on the property ladder.

Lifetime ISA

A Lifetime ISA (LISA) helps you save a deposit with yearly bonuses from the government. You need to open the account when you’re aged between 18 and 40. You can save up to £4,000 each tax year without being taxed on the interest earned. The government gives you a 25% bonus on top of your savings and you can earn interest on that too.

Help to Buy: Equity Loan scheme

As long as you’ve saved at least a 5% deposit, this government-backed scheme allows you to borrow up to 20% of the property’s value (or up to 40% in London) for a newly built property. Your deposit is payable on exchange of contracts. You need to take out a repayment mortgage for at least 25% of the purchase price.

Once your equity loan has started, you pay a £1 monthly management fee until the loan is repaid. Your equity loan is interest-free for the first 5 years. After that, you pay interest at 1.75% of the loan amount each month until the loan is repaid. Every year in April, the interest rate will increase in line with the Consumer Prices Index plus an extra 2%.

You can make part repayments during the term to increase your share of the property, which is known as staircasing. This must be in increments of at least 10% of your home’s market value at the time. The equity loan must be repaid in full when either your repayment mortgage has been paid off, you sell your home or the loan term ends.

Shared ownership

Shared ownership is another good way to get onto the property ladder without having a large deposit. It’s a compromise between renting and buying — you buy between 25% and 75% of the property’s value and pay rent to a housing association at a discounted rate for the remaining portion. You need to use a mortgage to buy your share along with a deposit of 5–15% of your share’s value.

Our skilled mortgage brokers in Kent, London and Edinburgh are highly experienced at guiding first-time buyers through the mortgage process. They are ready to answer any queries you may have in an understandable, jargon-free way. This ensures you are completely at ease about purchasing your first home.

Give us a call on 01322 907 000 to get an idea of how much you can borrow. We can help you work out what you can comfortably afford for your monthly repayments. We will talk you through the different mortgage types and incentives available to discover which option is best for your situation and preferences. Alternatively, send an email to us at info@trinityfinance.co.uk. One of our mortgage consultants will reply to you as quickly as possible.

With extensive knowledge of the mortgage market and with access to mortgages that are only available via brokers, our mortgage experts can search for the most competitive products to suit your requirements. Whether you prefer a higher loan-to-value ratio to accommodate paying a low deposit, a discounted rate at the start of your mortgage or the ability to pay lower fees, they will look for the best incentives offered by lenders.

Once we have secured the best mortgage deal for you, we will help you prepare your mortgage application. This ensures it is as strong as possible, improving your chances of success with the lender. We will oversee your mortgage process from start to finish and keep you informed throughout to reassure you during your first home-buying experience. With our attentive service, you can leave the worrying to us and look forward to the day when you can collect the keys to your first home.

Most lenders work from affordability (income, outgoings, and credit). Use our calculator for a ballpark, then we’ll tailor it to your case.

Often yes, via standard products or the Mortgage Guarantee Scheme; pricing depends on credit, income and property.

Strong credit helps, but we also work with lenders open to thin files or minor blips.