First-time home buyer guide

A first-time buyer is someone who:

• is buying their first home, and 

• has never owned a residential property in the UK or any other country.

Even though it's called first-time ‘buyer,’ it really means first-time ‘homeowner’.  

If you have inherited or been given a home, you might not be considered a first-time buyer and may miss out on special homebuying schemes and benefits.

Some lenders might consider you for their first-time buyer products if it’s been a few years since you owned a property. But you’re unlikely to qualify for government schemes for first-time buyers. Always check with individual providers and schemes to see if you’re eligible. 

Find out more about home buying in our step-by-step guides:

• Buying a house or flat in England, Wales and Northern Ireland

• Buying property in Scotland.

A mortgage is a loan to buy a home or land. 

For example, if you have savings of £12,500 to put towards buying a property, but the home you want costs £250,000, you can get a loan (mortgage) to cover the remaining £237,500. This loan will come from a lender like a bank or building society. 

There are two types of mortgages – repayment and interest-only. You’ll make monthly repayments whichever type you choose.

Be aware that your new home is used as ‘security’ against the mortgage. Your lender can take back your home (known as repossession) if you don’t keep up repayments, but this is usually only as a last resort. 

A mortgage term (or mortgage length) is the amount of time you have to pay back your loan and interest. Mortgages can last anywhere between 2 to 40 years. 

The longer you have to repay the loan, the lower your monthly payments. But you might pay more in interest over time.

When it comes to repaying your mortgage, there are two different types:

• Repayment – where you make monthly payments to clear the mortgage and the interest. 

• Interest-only – where the repayments pay off the interest and you repay the loan as a lump sum at the end of the term. 

Find out more in our guide Interest-only and repayment mortgages explained.

The interest rate on your mortgage is what your lender charges you for borrowing money, and this is added to the amount you borrow.

You can choose either a mortgage with an interest rate that stays the same each month (fixed rate) or one that changes with the Bank of England base rate (variable or tracker rate).  

A fixed rate can give you peace of mind, as you know exactly what you’ll pay each month, but you won't benefit from any drop in interest rates until you move onto a new deal. 

A variable or tracker rate can mean your repayments go down if interest rates fall and will vary month to month. 
 
Find out the pros and cons in our guide Understanding mortgages and interest rates.

When talking about mortgages, you might hear people mention ‘Loan to Value’ ratio or LTV. 

This is simply the amount you borrow to buy your home (the mortgage loan) compared to the value of the property. 

Here's an example for a £250,000 home: 

• your deposit is £25,000 (10%) 

• you get a mortgage for £225,000 (90%) 

• your LTV is 90%.  

This is because the mortgage amount you need to borrow (£225,000) is 90% of the home’s value (£250,000). 

The lower the LTV, the lower your interest rate is likely to be. This is because the lender takes less risk with a smaller loan. 

The cheapest interest rates are typically available with a 40% deposit, which is a 60% LTV. 

The deposit is the cash you put towards buying a home. As a first-time buyer this will usually come from your savings. 
 
Your deposit should be at least 5% or 10% of the price of the home you’d like to buy. The bigger your deposit, the less you might need to borrow. 

Larger deposits can also give you access to a wider range of mortgage deals or lower interest rates to save you money in the long term.

Explore ways of saving money for a mortgage deposit.

The most important thing to think about as a first-time home buyer is whether you can afford to take this step. 

It’s a good idea to put together a budget before you start looking for a property. Think about how much you can afford to pay every month, remembering you’ll still have to cover everyday costs such as gas, electricity and food. 

Our free tools can help. 

• See what you might pay each month with our Mortgage affordability calculator.

• Check your finances using our Budget planner.

Apart from your monthly mortgage payments, there are other costs when buying a home. These can include: 

• survey costs

• solicitor or conveyancer fees

• mortgage fees 

• insurance and tax.

Check what you might pay in our guide Mortgage fees and costs when buying or selling a home.  

Applying for a mortgage can feel long and confusing, with many forms to fill out.

You can apply for a mortgage either:

• directly from a bank or building society, or 

• using a regulated mortgage adviser or mortgage broker. 

Advisers know a lot about the mortgage market and can help you find the mortgage that best suits your needs.

This is particularly useful if:

• you only have a small deposit

• you’re self-employed 

• there are other circumstances, such as you need a mortgage for a shared ownership scheme. 

You need to show proof of your income, debts and spending. If you are self-employed, you need tax returns and business accounts for the last two or three years.

Find out more in our guide How to apply for a mortgage. 

Comparison websites are a good starting point to see what’s available, interest rates and fees. 

• MoneySavingExpertOpens in a new window 

• MoneySupermarketOpens in a new window

• MoneyfactsOpens in a new window

When you buy a home, the property is either ‘freehold’ or ‘leasehold’.

If you buy a freehold property, you own both the house and the land it is on. 

If you buy a leasehold, you own the home but not the land. This means you have ownership for a set number of years.

With a leasehold property, you have to pay rent to the landowner, called the freeholder. There are usually service charges too, so it’s an extra cost to budget for. 

If you’re buying a flat or shared ownership, you’ll likely buy a leasehold or a share of the freehold. 

The longer the lease, the better for both the buyer and seller. Anything under 90 years is considered short. 80 years is key to remember. If the lease goes under 80 years after you buy the property it may be hard to sell, remortgage, or extend the lease.

Always check before making an offer as most lenders won’t consider a mortgage if the lease is less than 70 years.

Find out more in our guide Leasehold vs freehold: what’s the difference?

This depends on where you are in the UK and the value of your new home.  

First-time buyers typically get a special deal called ‘First-time buyers’ relief’ where you’ll pay either zero or a reduced rate tax on your house purchase.

First-time buyers in England and Northern Ireland pay no Stamp Duty (SDLT) on homes up to £300,000. 

For properties between £300,001 and £500,000, you’ll pay a reduced rate of 5%.

First-time buyers’ relief isn’t available on homes valued over £500,000.

See what SDLT you might pay with our Stamp Duty calculator.

In Scotland, first-time buyers don’t pay Land and Buildings Transaction Tax (LBTT) on homes up to £175,000.  

See what LBTT you might pay with our Land and Buildings Transaction Tax calculator. 

First-time buyers in Wales pay the same tax as other buyers. However, there’s no Land Transaction Tax (LTT) on properties costing up to £225,000. 

If you need to calculate the LTT for your home, use our Land Transaction Tax calculator. 

There are a range of schemes available to help first-time buyers get on the housing ladder, particularly if you only have a small deposit. 

Find out more in our guide Government schemes for first-time home buyers and existing homeowners.

It’s a good idea to talk to an independent mortgage adviser about the other options available, including specialist first-time buyer mortgages and new-build buying schemes.