You’ve scrimped, saved, and finally put together a deposit. This is the first step for many first-time home buyers since this part often takes the longest. Once you have that deposit, however, what’s next? How to get a mortgage for a first time buyer?

This guide covers everything you need to know about getting your first mortgage and how to use the available first-time buyer schemes to help you get onto the property ladder faster.

How to get a mortgage: First-time buyer guide

Who is a first-time buyer? A first-time buyer is anyone who has never owned a residential property. To be a first-time buyer, you must not:

• Own a property
• Have inherited a residential property
• Owned and sold a residential property

Fun fact: you can have owned a commercial property before or currently own one. So, if you own a shop, workshop, or store, you can still apply as a first-time buyer.

If only one person in an application is a first-time buyer (for example, person A is a first-time buyer, but person B has inherited a property or owned one before), then you aren’t considered a first-time buyer. It’s okay if you’re not! It just means that there are a few government programs you don’t qualify for.

First-time buyer benefits

While first-time buyers don’t get any specific perks when getting a mortgage, many first-time buyer schemes help you get on the property ladder. To start, there’s a reduction in how much stamp duty tax you need to pay as a first-time buyer.

There is also the government First Home Scheme, where first-time buyers can purchase their home for 20 to 50% less than what it’s available for on the market. If you opt for this option, just remember you need to pass on that discount to the next buyer, and that buyer must also be a first-time buyer.

As a first-time buyer, there’s also no chain, meaning you can quickly relocate since you don’t need to sell your property first or have to move out by a specific date.

Challenges for first-time buyers

The main challenge for first-time buyers is saving up for their deposit. Those who already have a property can usually use the money from their house sale towards their next property. First-time buyers need to save.

This cash lump sum typically needs to cover at least 10% of the price of the property, though there are mortgage options and routes that let you put down less.

The general rule of thumb, however, is that the larger the lump sum, the better. If you have a larger lump sum, you’re more likely to be offered mortgage deals. Larger lump sums may also come with more generous terms.

With a mortgage broker at your side, you can compare mortgage offers no matter your circumstance, so you can choose the best option for your situation or decide to hold off until it’s a better time for you to buy.

How much can you borrow?

How much you can borrow depends entirely on your situation. Lenders look at factors such as:

• Your income
• Your job history
• Your debt
• Your savings
• Living costs
• Cost of rent

Generally, lenders tend to offer mortgages around 4.5 times your annual income (single or combined if you are buying jointly with someone else). While this is not a guarantee, it does help you understand the general ballpark and help you benchmark your savings.

If your combined income is £100,000 per year, for example, you might be able to borrow £450,000 (in reality, this will be less since you have living costs, debts, student loans, and so on to factor in). However, setting a benchmark to save £45,000 is a great place to start.

I have a deposit – how to get a mortgage as a first-time buyer?

·         Get an Agreement in Principle

The next step is to get a mortgage in principle or an agreement in principle. These usually last for so many days (between 30 to 90), so you’ll need to house hunt ASAP once you get one.

An agreement in principle is a soft agreement, but not the mortgage itself. You’ll want to use it to start searching for homes within your price range and, most importantly, to have a strong negotiating position. Some estate agents may not even show you homes until you have a mortgage in principle.

·         Make an offer on a home

Once you find a place, you’ll want to make an offer. If it’s accepted, you’ll want to get a survey to check the property’s condition and use that information to help you decide whether you’ll keep your offer as is or make a different one.

·         Apply for a mortgage

If all is well, you’ll need to go back and make your full mortgage application. Now, something you need to remember is that you don’t need to go with the lender who you have an agreement in principle with.

That’s why it’s a good idea to use our independent mortgage broker services again. There might be a better agreement waiting for you, and since you have a home and an offer accepted, you can then make a full application on the spot.

Of course, you can go to the lender who also gave you the agreement in principle. Whatever works for you!

Reasons why you may not get your mortgage

Just remember in your quest to uncover how to get a mortgage for a first-time buyer that your application can fail if you have hidden debts or if you were unable to meet eligibility criteria, even after you get an agreement in principle.

Another reason your application can be rejected is if the property you want to buy doesn’t pass the mortgage valuation (meaning you’re overpaying for the property). Sometimes, you’ll be rejected outright; at other times, the amount you can borrow may be reduced.