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Best Mortgage Rates for First Time Buyers

Start your search for a first time buyer mortgage with Moneyfactscompare.co.uk. Not sure which type of mortgage is right for you? Visit our mortgage guides and mortgage news sections. Ready to compare rates? Select a page below and start comparing providers.

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Best First Time Buyer Rates

Product Type
Rate
APRC
Max LTV
2 Year Fixed
4.69%
7.3%
90%
5 Year Fixed
4.41%
6.5%
90%
All Fixed Terms
4.41%
6.5%
90%
85% LTV
4.03%
6.3%
85%
90% LTV
4.41%
6.5%
90%
95% LTV
4.54%
7.1%
95%
Guarantor mortgages (100% LTV)
4.80%
7.8%
100%
Discounted Variable
4.97%
8.3%
90%
Variable
4.97%
8.3%
90%
All First Time Buyer
4.41%
6.5%
90%
Disclaimer

Credit will be secured by a mortgage on your property. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Written quotations are available from individual lenders. Loans are subject to status and valuation and are not available to persons under the age of 18. All rates are subject to change without notice. Please check all rates and terms with your lender or financial adviser before undertaking any borrowing.

First time buyer mortgages explained

Can I afford a mortgage?

First time buyers need to start by understanding how much they can afford to borrow. There are two key steps to this:

1. Understand your monthly budget

List out your income and expenditure, you can use a spreadsheet or a budgeting app.

2. Find out the cost of your mortgage

Use our mortgage repayment calculator to get an indication of how much your mortgage might cost each month.

Make sure you remain realistic about how much you could pay for a mortgage each month and consider the impact that a change in interest rates might have. Our calculator can show the change an increase in interest rate will have on your monthly payments. While you can fix your mortgage interest rate, this will only be for a set period of years and a mortgage is a longer-term debt, often of 25 years or more. You could find your second mortgage comes at a different interest rate.

 

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How much can I borrow?

Mortgage lenders are required to complete mortgage affordability checks to make sure that any loan they give you is affordable. This includes a review of your income and outgoings to determine whether you have enough cash each month for the mortgage. Lenders may use independent data to determine what they deem is reasonable for some items of expenditure such as travel and food costs etc. based on the number of adults and children in your household, others may use your actual information based on bank statements.

Any existing costs of credit such as loan repayments or credit cards will also be included, and some lenders may choose to also include a factor for the risk of any available credit you might have access to. Lenders will also stress-test your affordability using a higher mortgage rate – this is to show you can withstand future potential rate increases.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

 

Speak to an award-winning mortgage broker today

 

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Your home may be repossessed if you do not keep up repayments on your mortgage.

How to improve your chances of getting a mortgage

Lenders need to be as sure as possible that if they give you a mortgage you can pay it back. They do this by checking your affordability and completing credit checks about you, and your partner if you are getting a joint mortgage.

1. Understand your credit score

You should start by establishing what your credit score is today. You can get a quick indication of this using a credit check service. You should then apply for a free copy of your credit file from all three main credit reference agencies, TransUnion, Experian and Equifax.
Read our credit check guide to find out what a good credit score is.

Once you have your credit report, you should check this for any errors and ask lenders to correct these. You can also make a notice of correction via the credit reference agency.

2. Improve your credit score

You will need to make yourself as appealing as possible to future lenders and a higher credit score should mean more lenders will be willing to lend to you (subject to the factors already outlined in this guide so far). Improving your credit score can take many months, it is not a quick process.

Read more about improving your credit score.

Some of the basics you need to cover are:

  • Electoral roll – most lenders use the electoral roll to verify your identity
  • Spring clean your credit file – make sure any existing credit arrangements are registered at your current address and any past joint financial relationships are removed
  • Build your credit score – you need to show lenders a history of successfully paying back credit. To do this you can obtain a credit card, spend a nominal amount each month and then pay it back in full and on time to avoid interest charges and fees. There are also credit cards designed for those with a poor credit history. A lot of credit card providers offer a soft credit check, and this means you can see the likelihood of being accepted before you formally hit your credit file.

3. Stay on top of your finances

Lenders will use your credit score and your history of managing finances to decide if you are creditworthy.

  • Keep debts as low as possible – stay within 30% of your credit card limits. Not only does this debt impact your affordability, but if you currently have too much, this will reduce your creditworthiness
  • Avoid certain types of credit – avoid payday loans and withdrawing cash on credit cards, as both significantly impact your credit score and indicate to lenders that you may have a problem with debt.

4. Think about when and how often you apply for credit

  • If you are refused credit then don’t keep applying to other lenders, it will only further reduce your credit score
  • Minimise credit applications in the months before you intend to make your mortgage application
  • County court judgements, unpaid or late payments can remain on your credit file for up to seven years. To get the best chance of being accepted for a mortgage, you should wait until these have expired.

 

First time buyer mortgage FAQs

How are first-time buyer mortgages different?

A mortgage that accepts first-time buyers isn’t really any different to other mortgages or a remortgage. The only difference is that the lender indicates they are happy to accept the lack of track record the buyer has in paying a mortgage and potentially a smaller deposit than someone remortgaging. Rates can sometimes be higher, especially at 90% and higher LTVs.

What is an APRC?

APRC stands for the annual percentage rate of charge. It takes into account, not just the initial rate, but also the product fees and other costs. This makes it easier to compare the costs of different mortgage products.

What are the typical costs besides fees when getting a mortgage?

Some additional costs you need to consider are:
1. Building insurance – this protects the construction of your property if it is damaged.
2. Contents insurance – this protects the contents of your home and sometimes garden and outbuildings.
3. Removal costs – this can range from a full removal service to hiring a removal van.
4. Storage costs – you may need to store items while waiting to move into your new home.
5. Furniture and electrical goods – even the basics can add up.
6. New locks and security – when you move into your new home, you may also want to change your locks and make sure the security such as window locks, etc is to the standard you require.

Will lenders give a mortgage on any property?

Lenders also have criteria for the types of properties they will lend against. For example, some will not give a mortgage on flats that are higher than a certain number of storeys, some may decline properties near to commercial properties and former local authority properties.

How many years should I set for my mortgage term?

Increasingly, lenders are offering longer mortgage terms of up to 30 years. Remember the longer the overall term of your mortgage, the more you will pay interest costs. You may choose a longer term if this helps to make your monthly mortgage payments more affordable. Some lenders will not allow your mortgage term to go into your retirement or will ask you to confirm how you will pay for your mortgage during this time.

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Ashley Seager

Digital Marketing Manager

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Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.