First Time Buyers
First-Time Buyer Mortgages Across London and the UK
Purchasing your first home—whether in London or elsewhere in the UK—is a major life milestone, but it can also feel overwhelming. The mortgage application process can be time-consuming and uncertain. That’s where we come in. As experienced mortgage brokers, we simplify the journey and support you every step of the way. From navigating your options to improving your chances of approval, we’re here to make the process smoother and more manageable.
How Much Can a First-Time Buyer Borrow?
The amount a first-time buyer can borrow largely depends on affordability, which lenders assess using two key methods:
Loan-to-Income Ratio (LTI)
This is a lender’s initial guide to how much they’re willing to lend, based on a multiple of your total income.
For example, if two applicants earn £30,000 each per year, their combined income is £60,000. If the lender applies an LTI of 4.5x, the maximum loan amount would be:
£60,000 × 4.5 = £270,000
LTI limits vary across lenders—some may cap it at 4.5x, while others may go as high as 5.5x or 6x, depending on the case. Several factors can affect this multiplier:
Total annual income (higher incomes often unlock higher LTIs)
Deposit amount
Employment type (e.g., employed vs self-employed)
Whether you’re a first-time buyer
As experienced mortgage brokers, we know the fine details of how lenders interpret income. We help ensure all eligible income is correctly presented to maximize your borrowing potential.
Affordability Stress Test
Beyond the loan-to-income ratio, lenders conduct a stress test to ensure you can keep up with payments—even if interest rates rise.
They do this by:
Reviewing your net income (from payslips, self-employment records, or other sources)
Subtracting regular expenses and financial commitments (e.g., loans, credit cards)
Calculating your disposable income, which must be able to cover projected mortgage payments—even at higher interest rates
In 2022, the Bank of England removed the mandatory 3% stress test buffer. This has given lenders more flexibility, especially for long-term fixed-rate mortgages (typically 5+ years). For these, some lenders now apply a less stringent—or no—stress test, which can significantly increase how much you’re allowed to borrow.
However, not all lenders offer this flexibility, which is why working with a broker can help identify which lender best matches your situation.
Frequently Asked Questions
Who Is Considered a First-Time Buyer?
A first-time buyer is someone who has never previously owned a residential property, either in the UK or abroad. While the steps to purchasing a home are largely the same for all buyers, first-time buyers often face unique hurdles—especially when it comes to saving for a deposit. That said, being a first-time buyer also comes with certain benefits, such as reduced or even zero stamp duty on properties up to a specific value.
Understanding Deposit Requirements – Why a Mortgage Broker Can Help
Saving for a deposit is typically the biggest barrier for first-time buyers. While a handful of lenders now offer 0% or 1% deposit mortgages, these deals come with very strict eligibility criteria, making them inaccessible to many buyers.
More commonly, lenders offer 5% deposit mortgages—a more realistic option for most first-time buyers. However, borrowing 95% of a property’s value is considered high-risk by lenders. There’s minimal equity in the property, meaning there’s less security if house prices drop. Because of this risk, lenders apply much stricter credit scoring systems and affordability checks.
This means that even if you’ve been with your bank for years and have no obvious credit issues, you could still be declined for a mortgage agreement in principle. This can be frustrating—but it’s where the support of a skilled mortgage broker becomes incredibly valuable.
As experienced brokers based in London, we know which lenders are most flexible, which are open to specific circumstances, and how to present your application to increase your chances of approval. We’ll help you navigate your options, avoid unnecessary rejections, and secure a mortgage that suits your financial situation.
What Is an Agreement in Principle (AIP)?
An Agreement in Principle is a conditional indication from a lender of how much they may be willing to lend you. It involves a soft credit check and helps show sellers and agents that you’re a serious buyer with borrowing power.
Although it’s not a final mortgage offer, we treat the process with the same diligence as a full application. We thoroughly review your documents and financials beforehand, just as a lender would, to increase the likelihood of success when your full application is submitted.
This is one of the key advantages of working with a mortgage broker. Unlike online bank platforms that may overlook certain income types or nuances in your case, we take everything into account from the outset.
How to Check and Improve Your Credit Score
Your credit score plays a major role in your mortgage eligibility. You can check your score through platforms like:
We also provide free access to your Equifax-powered credit report as part of our mortgage consultation service. Once you’re onboarded via our client portal, we use the report to accurately assess your profile and guide you on how to improve your score if needed.
A healthier credit score can mean access to better rates, more borrowing power, and smoother approval.
Tips to Strengthen Your Mortgage Application
Pay Down Debts
Reducing your outstanding debt can significantly boost your mortgage application in two key ways:
Improves Your Debt-to-Income Ratio:
Lenders typically assess how much of your income goes toward existing debt. If your total debts approach or exceed 50% of your annual income, it can raise red flags. Lowering this ratio improves your affordability in the eyes of most lenders.Frees Up Disposable Income:
Monthly debt repayments are counted as committed expenses. Paying off some debts means fewer deductions during the lender’s affordability assessment—potentially increasing the amount you can borrow.
Important: You don’t need to be completely debt-free to get a mortgage. Having loans or credit cards is perfectly acceptable—as long as your repayments are under control and factored into your affordability plan.
Make Timely Payments
This is one of the most important habits lenders look for. Since you’re requesting a significant loan, lenders want to see a consistent track record of repaying debts on time. Missed or late payments on credit cards, loans, or utility bills can negatively impact your credit profile.
If you’ve had issues in the past, don’t worry—it doesn’t necessarily disqualify you. In such cases, we may recommend:
A specialist lender more flexible with credit history
A larger deposit to offset the risk
Register on the Electoral Roll
Being registered to vote not only helps verify your identity and current address—it also improves your credit score. Lenders use electoral roll data during their credit checks, and your registration can increase your chances of approval.
Support Schemes for First-Time Buyers in the UK
Stamp Duty Relief
First-time buyers benefit from reduced stamp duty costs.
As of September 2022, if you’re purchasing a home worth up to £425,000, you may be completely exempt from paying stamp duty.
Note: From April 2025, the nil-rate band will be lowered to £300,000, so acting sooner may help you take advantage of the current savings.
Right to Buy Scheme
This scheme is designed for eligible council tenants in England. It gives you the opportunity to purchase your council home at a significant discount, making homeownership more accessible to long-term tenants.
Discount levels depend on how long you’ve lived in the property and its value
You must meet certain criteria to qualify
Shared Ownership
With shared ownership, you purchase a percentage of a property—usually between 25% and 75%—and pay subsidised rent on the remaining share.
Ideal for buyers with smaller deposits
You can increase your share over time through a process called “staircasing”
Available on new-build homes or existing properties through housing associations
Fees to Expect When Buying a Home
Arrangement Fee (Product Fee)
This is a fee charged by the lender for setting up your mortgage deal. It typically ranges between £999 and £1,499, and is usually payable at the point of full mortgage application.
You may choose to pay it upfront or add it to your mortgage. However, adding it to the loan will increase your overall interest payments.
Some lenders offer no-fee mortgage products—but these usually come with slightly higher interest rates.
Depending on the loan size and term, it may be more cost-effective to opt for a higher-rate, no-fee mortgage—especially if the upfront cost doesn’t lead to significant monthly savings.
Booking or Reservation Fee
Some lenders charge a booking fee (typically £100–£200) to reserve a specific mortgage deal, particularly fixed-rate products. This fee is non-refundable and is sometimes charged in addition to the arrangement fee.
Most high street lenders do not charge booking fees, but it’s important to check the terms of each product.
Valuation Fee
This covers the cost of a basic property valuation—carried out by the lender to confirm the property is worth the amount you’re borrowing.
Many mainstream lenders offer this valuation free of charge as part of the application process.
If you want a more detailed report (such as a Homebuyer’s Report or full structural survey), this will come at an extra cost and is optional but recommended for older or unusual properties.
Legal Fees (Conveyancing Costs)
You’ll need a solicitor or licensed conveyancer to handle the legal side of your purchase, including:
Conducting property searches
Managing contracts
Coordinating with the seller’s legal team
Handling the transfer of funds
Legal fees vary depending on the property’s value and complexity of the transaction but typically range from £800 to £1,500.
Note: We’ll also help ensure that the solicitor you choose is approved by your mortgage lender—not all solicitors are on every lender’s panel.
Arranging Your Mortgage
Securing the right mortgage is one of the most important steps in your homebuying journey. With so many lenders and mortgage products on the market, choosing the best option can feel overwhelming. As experienced brokers serving clients across London and the UK, we have access to a wide range of mortgage deals, including exclusive rates that may not be available directly to the public. Our goal is to match you with a mortgage that aligns with your personal circumstances, long-term goals, and budget.