Buying your first home is the biggest financial commitment most people ever make. The mortgage you choose determines how much you pay every month, how much interest you pay over the life of the loan, and how quickly you build equity in your property. Getting it right saves you tens of thousands of pounds. Getting it wrong costs you the same amount.

This guide covers everything a first-time buyer in the UK needs to know — from how mortgages work to how much deposit you need, how to find the best rate, which government schemes can help, and exactly how the application process works.

How Mortgages Work

A mortgage is a loan secured against a property. You borrow money from a lender (a bank or building society) to buy a home, and the property itself acts as collateral. If you stop making payments, the lender can repossess the property to recover the debt.

You repay the mortgage in monthly instalments over a set period — typically 25 to 35 years. Each payment covers two things: a portion of the original loan amount (the capital) and interest charged by the lender.

The interest rate determines how expensive the mortgage is. Even a small difference in rate — 0.25% — translates to thousands of pounds over the mortgage term. This is why finding the best rate matters so much.

How Much Deposit Do You Need?

Most lenders require a minimum deposit of 5% of the property's purchase price. On a £250,000 property, that means £12,500. On a £350,000 property, it is £17,500.

However, the larger your deposit, the better mortgage rate you will qualify for. Lenders price mortgages based on Loan-to-Value (LTV) ratio — the percentage of the property's value that you are borrowing.

At 95% LTV (5% deposit), you are in the highest-risk bracket and will pay the highest interest rates. At 90% LTV (10% deposit), rates improve noticeably. At 85% LTV (15% deposit), rates improve further. The best rates are typically available at 75% LTV (25% deposit) and below.

The difference between a 95% LTV rate and a 75% LTV rate can be 1% or more. On a £250,000 mortgage over 25 years, 1% higher interest costs approximately £35,000 more over the term. Saving a larger deposit before buying is one of the most impactful financial decisions you can make.

Our guide on how to build an emergency fund covers strategies for saving effectively, and how much to save each month helps you set realistic targets.

Types of Mortgage

Fixed rate

Your interest rate is locked for a set period — typically 2, 3, or 5 years. Your monthly payments stay the same regardless of what happens to interest rates in the wider economy. This gives certainty and makes budgeting straightforward.

At the end of the fixed period, you are moved to the lender's Standard Variable Rate (SVR), which is almost always significantly higher. Most borrowers remortgage to a new fixed deal before this happens.

Fixed rates are the most popular choice for first-time buyers because of the payment certainty they provide.

Variable rate (tracker)

Your interest rate moves up and down with the Bank of England base rate. If the base rate drops, your payments fall. If it rises, your payments increase. Tracker mortgages are transparent — you always know exactly how your rate relates to the base rate.

The risk is unpredictability. If interest rates rise significantly, your monthly payments could increase by hundreds of pounds. For first-time buyers stretching their budget, this uncertainty can be stressful.

Standard Variable Rate (SVR)

This is the lender's default rate — what you pay if you do not have a fixed or tracker deal. SVRs are almost always the most expensive option. Avoid remaining on an SVR if at all possible.

Offset mortgage

Your savings are held in an account linked to your mortgage. The lender offsets your savings against your mortgage balance when calculating interest. If you owe £200,000 and have £20,000 in savings, you only pay interest on £180,000. You do not earn interest on your savings but the tax-free mortgage interest saving is usually worth more.

Offset mortgages suit people with significant savings. For most first-time buyers who have stretched to save a deposit, they are less relevant initially.

Government Schemes for First-Time Buyers

Several government programmes exist specifically to help first-time buyers get on the property ladder.

Lifetime ISA (LISA)

You can save up to £4,000 per year into a Lifetime ISA and the government adds a 25% bonus — up to £1,000 free money per year. You must be aged 18 to 39 to open one, and the property you buy must cost £450,000 or less. The LISA can be used alongside other schemes.

Our ISA vs LISA vs Pension guide explains how the LISA fits into your broader savings strategy.

Shared Ownership

You buy a share of a property (between 25% and 75%) and pay rent on the remainder. This reduces the deposit and mortgage you need. Over time, you can buy additional shares (staircasing) until you own the property outright.

Shared Ownership is available through housing associations and is income-capped — you must earn below a certain threshold to qualify. It is particularly useful in expensive areas where buying outright is unaffordable.

First Homes

A government scheme offering new-build properties at a discount of at least 30% of market value. The discount stays with the property in perpetuity — when you sell, the next buyer also gets the discount. Eligibility requires being a first-time buyer with a household income below £80,000 (£90,000 in London).

Mortgage Guarantee Scheme

The government guarantees a portion of the mortgage to encourage lenders to offer 95% LTV products at competitive rates. This makes it easier for buyers with small deposits to access mortgages that might not otherwise be available.

Right to Buy

If you rent a council property, you may be eligible to buy it at a significant discount. Discounts vary by property type, location, and length of tenancy but can be substantial — up to £96,000 outside London and £127,900 in London.

Stamp Duty for First-Time Buyers

First-time buyers pay no Stamp Duty Land Tax on properties up to £300,000. On properties between £300,001 and £500,000, you pay 5% on the amount above £300,000 only. Properties above £500,000 do not qualify for first-time buyer relief — you pay stamp duty at normal rates on the full amount.

On a £350,000 purchase, a first-time buyer pays £2,500 in stamp duty (5% on the £50,000 above £300,000). A non-first-time buyer would pay significantly more on the same property.

Check current stamp duty thresholds before purchasing — these rates change in Budgets and the exact thresholds applicable at the time of your purchase may differ from what is listed here.

How to Get the Best Mortgage Rate

Use a mortgage broker

A mortgage broker compares deals across the entire market — including products from lenders that do not deal directly with the public. A good broker can find rates you would never find on your own.

Many brokers charge no fee to the buyer (they receive commission from the lender). Some charge a fixed fee, typically £300 to £500. Even fee-charging brokers often save you far more than their fee through better rates.

For a first-time buyer navigating the process for the first time, a broker also provides guidance, handles paperwork, and advocates on your behalf with the lender. The value goes well beyond just finding a rate.

Improve your credit score

Lenders assess your creditworthiness when determining what rate to offer. A higher credit score means access to better rates. Our guide on how to improve your credit score covers specific steps you can take in the months before applying.

Key actions include registering on the electoral roll, paying all bills on time, reducing existing debt, avoiding new credit applications in the months before your mortgage application, and checking your credit report for errors.

Save the largest deposit you can

Every 5% increase in deposit moves you into a better LTV bracket with lower rates. The jump from 5% to 10% deposit makes the biggest difference in available rates. If you can stretch to 15% or 20%, even better.

Consider the total cost, not just the rate

A mortgage with a lower interest rate but a high arrangement fee can cost more overall than a slightly higher rate with no fee. Calculate the total cost over the fixed period (monthly payments plus fees) to compare deals accurately.

Also consider any early repayment charges. If you think you might move, remortgage, or make overpayments during the fixed period, check what penalties apply.

The Application Process

Step 1: Get a mortgage Agreement in Principle

Before house hunting, get an Agreement in Principle (AIP) from a lender or broker. This confirms how much you can borrow based on your income and outgoings. An AIP is not a guarantee of a mortgage but shows estate agents and sellers that you are a serious, creditworthy buyer.

Step 2: Find a property

Search within your confirmed budget. Once you find a property you want to buy, make an offer through the estate agent.

Step 3: Make a full mortgage application

Once your offer is accepted, submit a full mortgage application with your chosen lender. You will need to provide proof of identity, proof of address, proof of income (payslips, tax returns, or accounts if self-employed), bank statements (typically three to six months), and details of the property you are buying.

Step 4: Valuation and survey

The lender arranges a valuation of the property to confirm it is worth what you are paying. This is to protect the lender, not you. You should arrange your own survey (homebuyer report or full building survey) to identify any problems with the property.

Step 5: Mortgage offer

If the lender is satisfied with the valuation and your application, they issue a formal mortgage offer. This confirms the terms — loan amount, interest rate, repayment schedule, and any conditions.

Step 6: Exchange and completion

Your solicitor handles the legal transfer of the property. At exchange of contracts, the sale becomes legally binding. At completion, the mortgage funds are released, the property becomes yours, and you get the keys.

The entire process from accepted offer to completion typically takes 8 to 12 weeks, though it can be longer if there are complications.

How Much Can You Borrow?

Most lenders will lend 4 to 4.5 times your annual income. Some specialist lenders offer up to 5 or 5.5 times income, particularly for high earners or professionals in certain fields.

For a single applicant earning £35,000, borrowing at 4.5 times income gives a maximum mortgage of £157,500. Combined with a 10% deposit, this allows a purchase price of approximately £175,000.

For joint applicants earning £35,000 and £30,000, combined income of £65,000 at 4.5 times gives a maximum mortgage of £292,500. With a 10% deposit, this allows a purchase price of approximately £325,000.

The lender also assesses affordability based on your actual outgoings — existing debts, regular commitments, childcare costs, and living expenses. The income multiple is a starting point, not a guarantee.

Additional Costs to Budget For

The purchase price and deposit are not the only costs. Budget for solicitor fees (£1,000 to £2,000), survey costs (£300 to £1,500 depending on type), mortgage arrangement fee (£0 to £2,000), valuation fee (sometimes free, otherwise £150 to £500), removal costs, and any immediate repairs or furnishing needed in the new property.

A realistic total for additional costs is £3,000 to £6,000 on top of your deposit. Having this set aside prevents nasty surprises during the process.

Common First-Time Buyer Mistakes

Stretching too far on budget. Just because a lender will lend you a certain amount does not mean you should borrow it all. Borrow what you can comfortably repay, with room for interest rate increases and unexpected expenses.

Not getting a proper survey. The lender's valuation is for their benefit, not yours. A homebuyer report or building survey can identify problems that cost thousands to fix. The survey fee is insignificant compared to discovering structural issues after purchase.

Staying on the SVR after the fixed period ends. When your fixed rate expires, remortgage immediately. Every month on the SVR costs you money unnecessarily.

Not comparing mortgage deals. The difference between the first offer you receive and the best available deal can be thousands of pounds per year. Use a broker or compare deals across multiple lenders.

Ignoring the fees. A low headline rate with a £2,000 arrangement fee may cost more over the fixed period than a slightly higher rate with no fee. Always compare total cost.

Frequently Asked Questions

How much deposit does a first-time buyer need?

The minimum is 5% of the property price with most lenders. However, a 10-15% deposit significantly improves the interest rates available to you.

Can I get a mortgage with bad credit?

It is more difficult but not impossible. Some specialist lenders offer mortgages to borrowers with adverse credit, though at higher interest rates. Improving your credit score before applying gives you access to better deals.

How long does a mortgage application take?

From submission to offer, typically 2 to 6 weeks. The full process from accepted offer to completion usually takes 8 to 12 weeks.

Should I get a fixed or variable rate?

For most first-time buyers, a fixed rate is recommended. It provides payment certainty during the early years of homeownership when budgets are typically tightest.

Can I overpay my mortgage?

Most mortgages allow overpayments of up to 10% of the outstanding balance per year without penalty. Overpaying reduces the total interest you pay and shortens the mortgage term. Our guide on compound interest explains why overpayments are so powerful.

Last updated: March 2026. Mortgage rates, stamp duty thresholds, and government scheme eligibility change regularly. Verify current figures with your lender, broker, or on gov.uk before making financial decisions. This guide is for informational purposes only and does not constitute mortgage or financial advice.