First-Time Buyer Mortgages in the UK: Complete Guide (2025)
Everything first-time buyers need to know about getting a mortgage in the UK. Government schemes, deposit requirements, and step-by-step process.
Buying your first home is one of the biggest financial decisions you'll ever make. The UK property market can feel overwhelming, with confusing jargon, government schemes, and thousands of pounds in additional costs beyond the property price. This comprehensive 2025 guide walks you through everything first-time buyers need to know: how much you can borrow, deposit requirements, all available government schemes, the complete buying process, and money-saving tips that could save you thousands.
How Much Can First-Time Buyers Borrow in 2025?
Mortgage lenders typically offer 4 to 4.5 times your annual income, though some offer up to 5.5x for high earners or those with large deposits. Joint applications combine both incomes.
Mortgage Borrowing Calculator by Income
| Annual Income | 4x Multiple | 4.5x Multiple | 5x Multiple | Property Price (10% deposit) |
|---|---|---|---|---|
| £25,000 | £100,000 | £112,500 | £125,000 | £111,000 - £139,000 |
| £35,000 | £140,000 | £157,500 | £175,000 | £156,000 - £194,000 |
| £50,000 | £200,000 | £225,000 | £250,000 | £222,000 - £278,000 |
| £75,000 | £300,000 | £337,500 | £375,000 | £333,000 - £417,000 |
| £100,000 (joint) | £400,000 | £450,000 | £500,000 | £444,000 - £556,000 |
It's Not Just About Income
Lenders also assess: monthly outgoings, existing debts, credit commitments, childcare costs, and whether you could afford payments if interest rates rose by 3%. Reduce debts and cancel unused credit cards before applying to maximize your borrowing power.
Deposit Requirements and LTV Explained
Loan-to-Value (LTV) is the percentage of the property price you're borrowing. A 10% deposit means 90% LTV. Lower LTV = better rates.
Deposit Impact on Mortgage Rates (2025)
| Deposit % | LTV | On £250,000 Home | Typical Rate | Monthly Payment (25yr) |
|---|---|---|---|---|
| 5% | 95% | £12,500 | 5.5-6.5% | £1,230-1,340 |
| 10% | 90% | £25,000 | 4.8-5.8% | £1,130-1,230 |
| 15% | 85% | £37,500 | 4.5-5.2% | £1,080-1,160 |
| 20% | 80% | £50,000 | 4.2-4.8% | £1,030-1,100 |
| 25% | 75% | £62,500 | 4.0-4.5% | £990-1,050 |
The Key LTV Thresholds
- 95% LTV: Minimum for most lenders, highest rates
- 90% LTV: Significantly better rates, more lender choice
- 85% LTV: Major rate improvement, common first-time buyer target
- 80% LTV: Excellent rates, considered low risk
- 75% LTV: Best rates available in the market
Hitting the Next Threshold
If you're close to a threshold (e.g., 91% LTV), it's often worth waiting to save a bit more to reach 90% LTV. The rate improvement can save hundreds per month. Use the time to boost your credit score too.
All Government Schemes for First-Time Buyers (2025)
1. Lifetime ISA (LISA)
The LISA is the most valuable scheme for first-time buyers - a 25% government bonus on your savings.
Lifetime ISA Details
| Feature | Details |
|---|---|
| Annual contribution limit | £4,000 |
| Government bonus | 25% (up to £1,000/year) |
| Age requirement | Open between 18-39, use until 60 |
| Property price limit | Up to £450,000 |
| Minimum time before use | 12 months from first payment |
| Early withdrawal penalty | 25% on amount withdrawn (lose bonus + pay fee) |
| Maximum bonus possible | £33,000 (saving from 18-50) |
LISA Strategy
Open a LISA as early as possible, even with just £1, to start the 12-month clock. Maximum contribution at start of tax year (April) to earn interest/growth on the bonus. A couple can save £8,000/year and get £2,000 free.
2. First Homes Scheme
First Homes offers 30-50% discount on new-build properties from participating developers.
First Homes Scheme Details
| Requirement | Details |
|---|---|
| Discount | 30-50% off market value |
| Income cap | £80,000 (£90,000 in London) |
| Property price cap (after discount) | £250,000 (£420,000 in London) |
| Mortgage requirement | At least 50% from mortgage/deposit |
| Key worker priority | NHS, teachers, police, military prioritised |
| Resale rules | Must sell to eligible buyer at same discount |
3. Shared Ownership
Buy a share (25-75%) and pay rent on the rest. Staircase to full ownership over time.
Shared Ownership Details
| Feature | Details |
|---|---|
| Initial share | 25-75% of property value |
| Rent on remaining share | Up to 2.75% of housing association's share per year |
| Income cap | £80,000 (£90,000 in London) |
| Deposit required | 5-10% of your share (not full property) |
| Staircasing | Buy additional shares at current market value |
| Repairs responsibility | You're responsible for all repairs |
Shared Ownership Considerations
While requiring less deposit, shared ownership has drawbacks: rent increases, difficulty selling, expensive staircasing if property values rise, and you pay for all repairs even on the share you don't own. Run the numbers carefully against renting or waiting to buy outright.
4. Right to Buy (Council Tenants)
Council tenants can buy their home at a discount based on tenancy length:
- House discount: 35% after 3 years, +1% per extra year, max 70%
- Flat discount: 50% after 3 years, +2% per extra year, max 70%
- Maximum discount: £96,000 (£127,900 in London)
- Repay discount if sell within 5 years: On sliding scale
First-Time Buyer Stamp Duty Relief
First-time buyers get significant stamp duty savings in England and Northern Ireland:
First-Time Buyer Stamp Duty (2025)
| Property Price | Standard SDLT | First-Time Buyer SDLT | Your Saving |
|---|---|---|---|
| £250,000 | £0 | £0 | £0 |
| £300,000 | £2,500 | £0 | £2,500 |
| £400,000 | £7,500 | £5,000 | £2,500 |
| £425,000 | £8,750 | £6,250 | £2,500 |
| £500,000 | £12,500 | £10,000 | £2,500 |
| £625,000+ | Standard rates | No relief available | £0 |
Relief Threshold
First-time buyer relief is only available on properties up to £625,000. Above this, you pay standard rates. The relief saves you up to £2,500 by paying no stamp duty on the first £425,000 and 5% on the portion between £425,001 and £625,000.
The Complete Home Buying Process: Step by Step
Stage 1: Preparation (2-6 months before searching)
- Check credit scores: ClearScore, Credit Karma, MSE Credit Club (all free)
- Fix any credit issues: Errors, old addresses, financial links to ex-partners
- Save deposit: Open LISA if eligible, aim for at least 10%
- Reduce debts: Pay down credit cards, close unused accounts
- Stabilise income: Avoid job changes if possible, gather payslips
- Research areas: Schools, transport, crime rates, flood risk
Stage 2: Getting Mortgage Ready
- Get Agreement in Principle (AIP): Free, takes 24-48 hours, shows sellers you're serious
- Speak to a mortgage broker: Access to whole market, often free (paid by lender)
- Gather documents: ID, 3 months payslips, 3 months bank statements, P60, proof of deposit
- Calculate total budget: Property + stamp duty + solicitor + survey + moving costs
Free Mortgage Brokers
Many brokers are "whole of market" and paid by lenders, so free to you. L&C, Habito, and London & Country are popular free options. They can access deals not available directly and handle paperwork for you.
Stage 3: House Hunting
- Set up alerts: Rightmove, Zoopla, OnTheMarket
- View multiple properties: View at different times of day
- Check surroundings: Visit area at night, check parking, neighbour noise
- Research prices: Check what similar properties sold for on Rightmove
- Consider future: Room to grow? Easy to sell? Area improving?
Stage 4: Making an Offer and Negotiations
- Research comparable sales: Know what similar properties sold for
- Start below asking: Typically 5-10% below in buyer's market
- Highlight your position: First-time buyer (no chain), mortgage agreed, flexible on timing
- Be prepared to negotiate: Counter-offers are normal
- Get acceptance in writing: "Subject to contract" - not legally binding yet
Stage 5: Post-Offer Process
Post-Offer Timeline
| Task | Typical Timeframe | Cost |
|---|---|---|
| Instruct solicitor | Immediately | £1,000-2,000 total |
| Full mortgage application | 1-2 weeks | Typically free |
| Mortgage valuation | 1-2 weeks | £0-300 (often free) |
| Survey (your choice) | 1-2 weeks | £400-1,500 |
| Searches | 2-4 weeks | £300-500 |
| Mortgage offer issued | 2-4 weeks | Free |
| Exchange contracts | 6-12 weeks from offer | Deposit paid (usually 10%) |
| Completion | 1-4 weeks after exchange | Balance paid, get keys! |
All Costs of Buying: The Full Picture
Complete First-Time Buyer Costs on £300,000 Property
| Cost | Amount | When Paid |
|---|---|---|
| Deposit (10%) | £30,000 | Exchange |
| Stamp Duty (FTB) | £0 | Completion |
| Solicitor/Conveyancer | £1,200-2,000 | Completion |
| Survey | £400-1,500 | During process |
| Mortgage fees | £0-2,000 | Various |
| Searches | £300-500 | During process |
| Removal costs | £500-2,000 | Moving day |
| Furniture/essentials | £2,000-5,000 | After moving |
| TOTAL CASH NEEDED | £35,000-43,000 | - |
Budget for the Unexpected
Beyond these costs, have an emergency fund for immediate repairs. Boiler issues, leaks, and appliance failures often happen shortly after moving in. Budget at least £1,000-2,000 as a "new home" contingency.
Survey Options Explained
Property Survey Types
| Survey Type | Cost | What It Covers | Best For |
|---|---|---|---|
| Mortgage Valuation | £0-300 | Basic check property worth the price | Lender requirement only |
| RICS Condition Report (Level 1) | £300-500 | Visual inspection, traffic light ratings | New builds, modern homes |
| RICS HomeBuyer Report (Level 2) | £400-700 | Above + issues, advice, valuation | Standard properties under 100 years |
| RICS Building Survey (Level 3) | £600-1,500 | Comprehensive structural survey | Old, unusual, or renovation properties |
Never Skip the Survey
The mortgage valuation is NOT a survey - it protects the lender, not you. A proper survey can identify issues costing thousands to fix, giving you negotiating power or the chance to walk away. The £400-700 for a Level 2 survey is excellent insurance.
First-Time Buyer Mortgage Tips
Fixed vs Variable Rate for First-Time Buyers
Most first-time buyers choose fixed rates for payment certainty during an uncertain time:
- 2-year fix: Lower rates, flexibility to remortgage sooner, but more frequent fees
- 5-year fix: Payment security, fewer fees long-term, but less flexibility
- 10-year fix: Maximum security but highest rates and restrictive ERCs
Broker vs Direct: Which is Better?
Mortgage Broker vs Direct to Lender
| Factor | Broker | Direct |
|---|---|---|
| Access to deals | Whole market (thousands) | That lender only |
| Exclusive rates | Some broker-only deals | Some direct-only deals |
| Advice quality | Independent, in your interest | Sales-focused |
| Cost | Often free (lender pays) | Free |
| Time saving | They do the legwork | You research everything |
| Best for | Most first-time buyers | If you want a specific lender |
Common First-Time Buyer Mistakes
- Not getting an AIP first: Wastes time viewing homes you can't afford
- Maxing out borrowing: Leaves no buffer for rate rises or life changes
- Forgetting additional costs: Stamp duty, solicitor, survey, moving, furniture
- Skipping the survey: Can miss issues costing thousands
- Rushing to buy: Better to wait for right property than regret
- Ignoring future plans: Will it suit you in 5 years?
- Not negotiating: Asking price is just the start
- Changing jobs during application: Can delay or derail mortgage approval
- Making big purchases before completion: New car on finance can affect affordability
Frequently Asked Questions
How long does the whole process take?
Typically 8-16 weeks from offer acceptance to completion. Chains, legal issues, or mortgage delays can extend this. First-time buyers with no chain to manage are attractive to sellers.
Can I use a gifted deposit from family?
Yes, most lenders accept gifted deposits from immediate family. The gifter must confirm in writing that it's a gift (not a loan) and they have no interest in the property.
What happens if the survey finds problems?
You can: renegotiate the price based on repair costs, ask the seller to fix issues before completion, or withdraw (you'll lose survey cost but nothing else before exchange).
Do I need a solicitor or can I use a conveyancer?
Both can handle standard purchases. Solicitors cost slightly more but can handle complex legal issues. For straightforward purchases, licensed conveyancers are fine and often cheaper.
Key Takeaways for First-Time Buyers
1. Open a Lifetime ISA immediately for 25% free money on your deposit
2. Aim for at least 10% deposit to access better rates
3. Get an Agreement in Principle before house hunting
4. Use a mortgage broker - usually free and access to better deals
5. Budget for ALL costs: 10-15% of property price in cash beyond deposit
6. Always get a proper survey - it can save thousands
7. Don't change jobs or make big purchases during the process
8. First-time buyer stamp duty relief saves up to £2,500
Frequently Asked Questions
How much deposit do I need as a first-time buyer?
Typically 5-20% of the property value. Government schemes like Help to Buy can help with smaller deposits.