First Time Buyer
Get in touch today to discuss the most suitable mortgage option for you.
Applying for your first mortgage doesn’t have to be stressful or challenging. At Mortgage Marketplace we’ll make sure you understand every step in the property journey, starting with how much you could borrow and a look at your credit score.
What is a First Time Buyer mortgage?
When you look for a mortgage you’ll generally be classed as a First Time Buyer or a Home Mover. The mortgages themselves are largely the same – there isn’t really a unique product just for people buying a first home.
Most types of mortgage are open to you: fixed rate, variable rate, interest-only or repayment mortgages. There are also options around how long your mortgage term will last, the term would ideally be the shortest affordable term, based on the lender’s criteria and your personal circumstances.
Every mortgage type has its own pros and cons, and we can help you decide what will suit you best.
How much can a First Time Buyer borrow?
Getting a sense of your budget is the first step in buying a home. Lenders will generally base the loan amount on your annual income, and offer around four to five times your salary. Your circumstances will however be assessed by the chosen lender, who will decide on the maximum loan amount.
You will also need to put down a deposit. Use a mortgage calculator to explore how much you could borrow and how the size of your deposit will affect the monthly mortgage payments.
How much deposit does a First Time Buyer need?
The average property deposit is around 10% of the price of the home, but some mortgage providers will accept 5%. If you can save up 15% or 20%, you will get better interest rates and lower monthly payments.
In April 2021 a new government 95% Mortgage Guarantee Scheme launched, supporting lenders to offer more 5% deposit mortgages. The aim was to boost the property market and help First Time Buyers get on the property ladder. The scheme runs until December 2022.
What is an Agreement in Principle?
An Agreement in Principle is another important step towards buying a home. It’s a statement from a mortgage lender that they are prepared to lend you a certain amount.
The Agreement gives you credibility with sellers and estate agents, because it shows you’ve asked about getting a mortgage and passed the initial assessments.
Getting an Agreement in Principle – or Decision in Principle – just involves talking to a lender who does a few checks on you. The agreement is free and valid for 30 or 90 days.
This is not a guarantee of a mortgage, though. You need to complete a full mortgage application once you’ve found a property, and sometimes things come to light that mean the lender declines.
How do I check my credit rating?
Lenders will always examine your credit score as part of the mortgage process. Missed payments, credit card debt and defaults can make it more difficult to find a lender to take you on. Special bad credit mortgages do exist, but you will need a bigger deposit and may have to pay higher mortgage rates.
You can look at your credit rating online and check for errors. Getting any mistakes changed can increase your credit score.
Can I improve my credit rating?
If your credit score is less than ideal, there are a few options to look at. First, check that you’re on the electoral roll, as this is a basic requirement for credit.
You can increase your credit rating by keeping your bank account out of overdraft, paying bills on time and staying within your credit card limits. Staying at the same address for three years or more is also seen as positive.
Support for First Time Buyers
The government has introduced a few property schemes to help First Time Buyers:
Help to Buy – Equity Loan
The Equity Loan is a way of boosting your deposit on a new build home, if you have 5% deposit you can borrow another 20% with an interest free government loan (for the first five years). You need a mortgage for the remaining 75%.
Help to Buy – Shared Ownership
With Shared Ownership you can part-rent, part-buy a home. You can start from a 10% share and increase it gradually over time – this is called staircasing.
Right to Buy
Council or Housing Association tenants can access the Right to Buy scheme. It gives you a big discount on a council/housing association property. The discount increases the longer you’ve been a tenant, maximum discounts apply.
Can a Mortgage Broker help First Time Buyers?
First Time Buyers find it really helpful to talk to a Mortgage Broker like Mortgage Marketplace. We can give you some initial support and advice, such as exploring your credit score and working out how much you can borrow. Then, we’ll look at suitable options and find you an affordable mortgage deal.
Our mortgage advisers enjoy being First Time Buyer guides – ask us anything. We know that the world of stamp duty, legal fees and applying for a mortgage can be daunting. Get in touch with our friendly team for a free consultation today.
Frequently Asked Questions
Call us today on 0800 170 7474 to discuss your borrowing potential and eligiability.
We believe in being competitive and transparent on fees.
Your initial mortgage consultation is free. You won’t be asked to pay a fee until we have submitted an application on your behalf.
Our fees depend on the product – see the list below or speak to an adviser.
Residential Mortgage & Remortgage
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £595.00 payable on receipt of mortgage offer. Total fees payable – £990.00.
Buy-to Let Mortgages & Remortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee from £595 up to 0.50% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable £1,395.00. A minimum broker fee of £595.00 will be applied on all buy-to-let applications.
Equity Release Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £1100.00 payable on completion of your mortgage. Total fees payable – £1,495.00.
Credit Repair Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee equal to 0.5% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable – £1,395.00. A minimum broker fee of £595.00 will be applied on credit repair applications.
No fee will be charged by us. You will receive a free quotation from the policy provider.
Typically, the mortgage process will take 2-6 weeks to reach approval.
A mortgage offer is usually valid for 6 months.
Please be aware, the process is currently taking longer due to Covid-19. Please see question ‘How has Covid-19 affected the mortgage market?’.
Whilst you are not required to take out a life cover, our job is to ensure your mortgage is affordable, no matter what. It may not be nice to talk about, but if something were to happen to you, you want to know your family and investment are safe.
We will advise on all the options available and provide a no obligation quote from our partner providers.