First Time Buyer Mortgage Guide UK

Buying your first home is one of the biggest financial decisions you will ever make. The process can feel overwhelming — unfamiliar jargon, large sums of money, and a long list of steps between finding a property and moving in. This guide walks you through the key stages, explains the different mortgage types available, and highlights government schemes designed to help first-time buyers in the UK.

How Much Deposit Do You Need?

The deposit is the single biggest hurdle for most first-time buyers. While there is no legal minimum, lenders typically require at least 5% of the purchase price. However, the larger your deposit, the better the mortgage rates you will be offered. This is because a bigger deposit means a lower loan-to-value (LTV) ratio, which reduces the lender's risk.

Types of Mortgage

Understanding the different mortgage types is essential. The right choice depends on your appetite for risk, how long you plan to stay in the property, and your view on where interest rates are heading.

Fixed-Rate Mortgages

With a fixed-rate mortgage, your interest rate stays the same for an agreed period — typically two, three, or five years, though longer fixes of up to ten years are available. This means your monthly repayments are predictable regardless of what happens to the Bank of England base rate. Fixed rates are the most popular choice among first-time buyers because they make budgeting straightforward. When the fixed period ends, you move onto your lender's standard variable rate (SVR), which is usually much higher. Most borrowers remortgage to a new deal before this happens.

Variable-Rate Mortgages

Variable-rate mortgages can go up or down. The lender's standard variable rate (SVR) is set by the lender and can change at any time — it is not directly tied to the base rate. SVR mortgages typically do not have early repayment charges, giving you flexibility to switch, but the rate can be unpredictable.

Tracker Mortgages

Tracker mortgages follow the Bank of England base rate plus a fixed margin. For example, "base rate + 1%" means if the base rate is 4.5%, you pay 5.5%. Trackers offer transparency — you know exactly why your rate changes. However, if the base rate rises significantly, so do your repayments. Some tracker mortgages have a "collar" (minimum rate) or a "cap" (maximum rate).

Discount Mortgages

A discount mortgage offers a reduction off the lender's SVR for a set period. For example, SVR minus 1.5% for two years. Because the SVR itself can change, your rate and repayments can still go up and down — the discount just means you pay less than the full SVR during the discount period.

Saving for a Deposit: The Lifetime ISA

The Lifetime ISA (LISA) is one of the most valuable tools available to first-time buyers. If you are aged between 18 and 39, you can open a LISA and save up to £4,000 per year towards your first home. The government adds a 25% bonus on top, meaning you can receive up to £1,000 per year in free money.

The property must be worth £450,000 or less and you must be a first-time buyer. If you withdraw for any other purpose before age 60, you will face a 25% penalty, which means you actually lose some of your original savings as well as the bonus. The LISA must have been open for at least 12 months before you can use it to buy a home.

Stamp Duty Relief for First-Time Buyers

First-time buyers benefit from stamp duty land tax (SDLT) relief in England and Northern Ireland. As of 2024/25, first-time buyers pay no stamp duty on the first £425,000 of a property priced up to £625,000. On properties between £425,001 and £625,000, you pay 5% on the portion above £425,000. If the property costs more than £625,000, you do not qualify for any first-time buyer relief and pay the standard rates.

Affordability Checks: What Lenders Look At

Since the Mortgage Market Review introduced by the FCA in 2014, lenders must carry out detailed affordability assessments. They will look at your income, regular expenditure, existing debts, and financial commitments. They will also "stress test" your ability to afford repayments if interest rates were to rise.

As a general rule, most lenders will offer between 4 and 4.5 times your annual salary, though some specialist lenders may go higher for certain professions. Joint applicants can combine their incomes. Lenders will review your bank statements, payslips, and credit history. Common factors that may reduce your borrowing capacity include outstanding loans, credit card balances, childcare costs, and regular subscriptions.

Your credit score plays a significant role. Credit files can be checked with the three main agencies — Experian, Equifax, and TransUnion. Being on the electoral roll, clearing any defaults, and avoiding new credit applications in the months before a mortgage application can all improve creditworthiness.

Getting a Decision in Principle

A Decision in Principle (DIP), also called an Agreement in Principle or Mortgage in Principle, is a conditional indication from a lender of how much they would be willing to lend you. It is not a guarantee — the lender will still need to carry out a full assessment and property valuation before making a formal offer.

Having a DIP is useful because it shows estate agents and sellers that you are a serious buyer who has taken the first step towards securing finance. Most DIPs last between 60 and 90 days. Obtaining one usually involves a "soft" credit check that does not affect your credit score, though some lenders may run a full check — ask your broker or lender before proceeding.

Mortgage Broker vs Going Direct to a Lender

You can apply for a mortgage directly with a bank or building society, or use a mortgage broker. A broker searches the market on your behalf and can access deals from multiple lenders — including some that are not available directly to consumers. For first-time buyers navigating the process for the first time, a broker can be particularly helpful.

The Buying Process: Step by Step

Once you have found a property and had your offer accepted, there are several steps before you get the keys.

The entire process from offer acceptance to completion typically takes 8 to 12 weeks in England and Wales. In Scotland, the process differs — the offer is legally binding much earlier.

Additional Costs to Budget For

Beyond your deposit, first-time buyers should budget for several additional costs. These can add £3,000 to £8,000 or more to your total outlay:

• Solicitor/conveyancer fees: £800–£1,500 plus disbursements (searches, Land Registry fees)
• Survey: £250–£600+ depending on the type (homebuyer report or full building survey)
• Mortgage arrangement fee: £0–£2,000 (can often be added to the mortgage, but you pay interest on it)
• Moving costs: £300–£1,500 for removal companies
• Buildings insurance: Required by your lender from exchange of contracts

When to Get Professional Advice

A mortgage is likely to be the largest debt you will ever take on. While it is possible to navigate the process alone, many first-time buyers benefit from speaking to a qualified mortgage adviser. They can help you understand how much you can realistically borrow, find the most suitable product, and guide you through the application process. This is especially valuable if your circumstances are not straightforward — for example, if you are self-employed, have a complex income structure, or have had credit issues in the past.

For broader financial planning around buying your first home — such as building an emergency fund, reviewing your insurance needs, or thinking about how a mortgage fits into your long-term financial picture — a financial adviser can provide valuable support. Read our guide on how to choose a financial adviser for tips on finding the right one.