Mortgage advice for first time buyers

This is one of the most exciting times in your entire life. You’re going to buy a place of your own, and you’re thrilled. But it’s more than exciting. Buying a place to live means making a sensible financial decision supported by the facts, and most people appreciate expert first time buyer help.

When you’re researching the ins and outs of first time buyer mortgage advice you’ll want to know who is a first time buyer and whether you qualify as one, how to get mortgage advice, how to get a first time buyer mortgage, and when’s the best time to do it all. 

As usual, knowledge is power. Read on to become your own first time buyer mortgage expert, steer clear of the pitfalls, and get the best deal for your circumstances. Here’s our expert guide to mortgage advice for first time home buyers.

Who Qualifies as a First Time Buyer?

First, a first time buyer definition. So who qualifies as a first time buyer? Exactly what is a first time buyer? It’s actually rather less straightforward than you might think. For a start, first time buyer status can vary between lenders, and the government has its own rules – which matter because first time buyers can qualify for benefits like the removal of Stamp Duty.

 If, as a single person or a couple, you want to buy a property and neither of you have ever owned property anywhere in the world before, you both qualify as first time buyers. But it’s about the ownership element of things, not the actual buying side. If you or your partner has ever had an inherited or gifted property, for example, you can’t qualify as a first time buyer.

If you’re buying as a couple and one of you has owned a place in the past, you won’t be considered first timers. On the other hand, owning or previously owning commercial property means you can still qualify as a first time buyer. Because the first time buyer rules only apply to a property used as a home, you can have owned, or still own, a shop or a cafe and qualify as a first timer. But when your commercial property has – or had – living quarters attached, you fall out of the first time buyer category.

 Imagine your parents buy you a place to live. They own their own home so they aren’t first timers. This means they can’t claim first time buyer status on your behalf. Buy-to-let landlords are also disqualified. As a landlord, even if you have never owned a home of your own before, you can’t claim to be a first time buyer and take advantage of government reductions in Stamp Duty.  

How Can I Get a First Time Buyer Mortgage?

One of the first big questions you’ll ask yourself is, can I get a first time buyer mortgage? There’s a process to go through to find out. First, how much money have you saved for a deposit? You’ll need to save a minimum of 5% of the purchase price of the place you want to buy, ideally more. The more you can put down in advance, the less you’ll need to borrow and the lower your repayments.  

Next, you need to establish which lenders will be willing to take you on, and how much they’ll be willing to lend you. It’ll vary, so make sure you explore enough alternatives to be sure you’re in the right place and have pinned down the best deal. They will need quite a lot of information from you to make a decision in principle, so make sure you have your finances in order and the relevant information at your fingertips. More about that shortly.

What is a first time buyer mortgage? There are several types of loan for first time buyers. You could decide for yourself which kind of first time buyer mortgage will suit you best. Or you could engage an expert who’ll give you solid advice. Where to get mortgage advice you can trust? Find an independent mortgage broker who will give you professional financial advice for free. Bear in mind some financial advisers have access to the entire mortgage market, others can only recommend products from one mortgage provider or a group of them. You might also want to try your own bank or building society, see what their first time buyer mortgage advisor says.

To give you a mortgage agreement in principle, the mortgage provider will need to assess your credit situation via credit checks. They’ll want to know your annual salary or income and the outgoings, loans and any other financial commitments you have. If you’re applying for a variable rate mortgage the lender will want to know if you can still afford the repayments if interest rates go up. This is called ‘stress testing’, and it’s something every new potential homeowner should do for themselves anyway. Can you afford to pay the mortgage if interest rates go up by 1%, 3%, even 5%?  

When Should I Apply for a First Time Buyer Mortgage?

Imagine you’re ready to begin your search, ready to start viewing properties with the intention of buying. Now’s the time to get your all-important mortgage agreement in principle from a suitable lender. Having it in place at this stage means estate agents should take you seriously. You’ve made the effort to source a mortgage and get it agreed, which means you’re ready to act fast if you need to.

 A mortgage agreement in principle is usually good for 30 to 90 days, something you need to check with your lender. If you haven’t found a place to buy when the agreement runs out, revisit your lender to get the loan re-agreed. Unless your circumstances have changed it should be straightforward enough.  

 It’s good to know there’s no charge to get an agreement in principle from a lender. And while you’re free to get multiple agreements in principle from different lenders, as a first time buyer this can have a negative impact on your credit score simply because applying for multiple lines of credit can make it look like you’re in financial trouble, desperate to borrow.

Now you’re your own first time buying expert

Now you know everything you need to know as first time buyers seeking mortgage advice. Follow the steps, follow our first time buyer advice, and the experience should be smooth and enjoyable. We’d like to wish you happy house hunting! You might also like to check out our expert advice on how to buy a house for first time buyers, and funding your own home