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First Time Buyer Guide

Table of Contents

Buying a home is a thrilling achievement for anyone. If you’re unsure about being ready to take that leap, here are a few important factors to consider.

What is a Mortgage?

First-time buyer mortgages are specifically designed for those who are entering the housing market for the first time, helping them afford their desired primary residence.

A mortgage is a loan that you take out to buy property or land. Usually, mortgages have a duration of 25 years, but they can be shorter or longer depending on your specific needs and situation.

When applying for a mortgage as a first-time buyer, it is important to consider the deposit requirement, which varies depending on factors such as the lender and the value of the property.

For many first-time buyers, a mortgage plays a vital role in making their homeownership dreams come true, providing the necessary financial support to achieve this significant milestone. 

Check out our guide on the types of mortgage to see what is the right fit for you.

How Much Deposit do I Need to Buy a House?

If you’re thinking about purchasing a home, one question that often comes up is, “How much deposit do I need for a house?” While the exact amount depends on various factors, it’s certain that you’ll need to have funds saved for a mortgage deposit unless you’ve got a large sum of cash sitting around.

There are 3 key steps to think about when looking at deposits:

  1. Calculate Your Deposit: Traditionally, lenders required a deposit of at least 5% of the property’s value. However, some lenders now offer low-interest rate loans with smaller deposit requirements. To find out the deposit amount that suits you, please use our mortgage calculator to find out how much you can borrow.

  2. Consider Fees: Apart from the initial deposit, it’s crucial to budget for additional costs such as legal fees, property surveys, and stamp duty. These expenses can accumulate rapidly, so it’s important to factor them into your property budget calculations.

  3. Save Up Money: To meet the deposit requirement, it’s advisable to aim for saving at least 5% of the property’s value. However, it’s worth considering saving a higher percentage to account for potential extra property expenses. Create a savings plan and allocate funds accordingly to make sure you’re prepared.

How do I Get a Mortgage?

If you have saved up a significant deposit, the next important step is to explore your options and find out if you qualify for a mortgage.

There are 6 steps to follow when going through the mortgage application process:

Assessing Eligibility and Goals

This step requires assessing:

  • Your current financial position
  • Considering your motivations for buying a home
  • Determining if you meet the lender’s eligibility criteria.

Provide Documentation

This may include:

  • Income statements
  • Tax returns
  • Bank statements
  • Other documentation related to your finances.


These documents help lenders assess your financial stability and determine your loan eligibility.

Choosing a Lender

When choosing a lender, it’s important to take into account elements such as:

  • Interest rates
  • Fees
  • Customer service.


Considering these factors allows you to make an informed decision that aligns with your financial needs and preferences.

Submitting Your Application

Once you submit your application, the lender will carefully assess it to determine if you meet their specific eligibility criteria.

They will review your application and evaluate whether you qualify for the mortgage based on their requirements.

Property Valuation

As a standard part of the mortgage application process, the lender usually conducts a property valuation to verify that its value aligns with the amount you intend to borrow.

This assessment ensures that the property’s worth meets the borrowing requirements set by the lender.

Closing the Deal

Completing the mortgage process involves:

  1. Signing the loan agreement
  2. Settling any relevant fees
  3. Transferring the funds required to pay off your current mortgage while establishing the new one


First Time Buyers may qualify for special programs or schemes that help secure a mortgage such as Shared Ownership or Help to Buy.

Esteem Homes also run Rent to Buy as well as Part Exchange to make it easier to move into the home you love.

Make sure to understand the specific eligibility criteria and requirements for these programs.

Mortgage Options

When considering property purchase, there is a wide range of mortgage options to choose from.

Please read our guide to see the extensive range of mortgage types and how they work.

Let’s explore some common types of mortgages, highlighting their benefits and drawbacks.

Fixed Rate Mortgage

A fixed-rate mortgage keeps the interest rate steady for a specified duration, typically ranging from two to five years.

This type of mortgage brings predictability to your finances as your monthly payments remain constant during the fixed rate period.

Interest Only Mortgage

With an interest-only mortgage, borrowers have the option to pay only the interest portion for a designated period, typically ranging from five to ten years.

This type of mortgage enables lower monthly payments during the interest-only phase, but it’s important to note that borrowers will need to repay the principal amount later on.

Variable Rate Mortgage

A variable rate mortgage features an interest rate that varies depending on housing market conditions, which includes factors like the availability of houses on the market.

Initially, this type of mortgage typically offers a lower interest rate compared to fixed-rate mortgages due to a higher supply of houses. However, as the housing market tightens and the availability of houses decreases, the interest rate may rise, potentially leading to higher monthly payments. 

Offset Mortgage

An offset mortgage is connected to a savings account, where the savings balance offsets the mortgage debt.

As a result, the borrower only pays interest on the disparity between the mortgage balance and savings balance.

This type of mortgage can be advantageous for individuals with significant savings, as it has the potential to decrease the overall interest paid over time.

Make Sure You Can Afford Your Monthly Repayments

When you’re a first-time home buyer, it’s crucial to consider if you can truly afford the purchase.

To begin, it’s wise to create a budget before searching for a property. Take into account your monthly affordability, ensuring you can cover not only mortgage payments but also everyday expenses like gas, electricity, and food.

You can calculate your mortgage affordability by using our mortgage calculator.


Seek professional advice from mortgage advisors, financial planners, or housing counsellors to gain expert guidance on affordability assessments and budgeting.

First Time Buyer Benefits

As a first-time home buyer, you have access to several benefits and programs that can assist you in getting onto the property ladder. 

In addition, Esteem Homes also use the Rent to Buy scheme as well as Part Exchange to further help first time buyers.

Below are 5 helpful pieces of information to help you plan.

First-Time Home Buyer Programs

The UK government provides several initiatives to support first-time buyers in their home purchase journey.

Some notable programs that would be good to look at are:

  1. Help to Buy: This program offers equity loans or shared ownership options, helping first-time buyers with a lower deposit requirement to purchase a new-build property.

  2. Shared Ownership: Through this scheme, first-time buyers can purchase a share (usually between 25% to 75%) of a property and pay rent on the remaining portion, making homeownership more accessible.

  3. Right to Buy: This scheme enables eligible council or housing association tenants to purchase their rented property at a discounted price, allowing them to transition from renting to owning.

  4. First Homes: This scheme provides financial assistance by offering a discount of at least 30% off the market price of a new-build home.

Lifetime Individual Savings Account (LISA)

A LISA is a specialised savings account designed specifically for first-time buyers.

It allows individuals to save for a deposit or retirement while benefiting from government bonuses.

Contributions made to a LISA receive a 25% bonus from the government, making it an attractive option for those looking to save for their first home or future retirement plans.

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme provides a valuable opportunity for first-time buyers who find it challenging to save a substantial deposit.

With this scheme, eligible individuals can secure a mortgage with just a 5% deposit for properties costing up to a maximum of £600,000.

This makes homeownership more accessible and opening doors to a wider range of properties.

Stamp Duty Relief

First-time buyers may qualify for stamp duty relief or exemptions, which can provide substantial cost savings during the property purchase process.

Stamp duty is a tax imposed on property transactions, and the relief aims to reduce or eliminate this tax burden for eligible first-time buyers.

This financial relief can help ease the financial strain associated with buying a property, making it more affordable to take the crucial step onto the property ladder.

It’s essential for first-time buyers to understand the specific eligibility criteria and thresholds set by the government to determine if they qualify for this valuable scheme.

Tax Benefits

First-time buyers can potentially enjoy tax advantages and incentives that enhance overall affordability.

These benefits may include property tax credits or deductions, providing opportunities to reduce tax liabilities and make homeownership more financially viable for first-time buyers.

Make sure to explore and understand the specific tax benefits available in your area to maximise the potential savings when purchasing your first home.

Costs of Buying a Home

When purchasing a home, it is important to take into account the different expenses associated with the process.

Here are some essential costs to keep in mind:

  • First Time Buyer Stamp Duty: As a first-time buyer, you might qualify for an exemption from stamp duty. However, if the property’s value exceeds a specific threshold, you may still be required to pay stamp duty.
  • Mortgage Valuation Fee: Your lender charges this fee to cover the expenses of a valuation survey that assesses the property’s value. The fee amount can vary based on both the property’s value and the specific lender.
  • Legal Fees for Buying a House: To manage the legal aspects of your home purchase, you will need a solicitor or conveyancer. The associated legal fees may differ based on the intricacy of the transaction.
  • Mortgage Advisor Fees: Choosing to work with a mortgage advisor will likely have fees attached. Some advisors offer free initial consultations. 

Finding and Choosing Your Home

When it comes to finding and choosing a property, thorough consideration of your preferences and requirements is very important.

From location and budget to property type and future needs, careful evaluation will guide you towards making the right decision for your new home. 

Follow this 4 step plan to help find and choose your brand new home:

Find Your Home

To begin your property search, the first step involves exploring properties that align with your needs and budget.

This can be done by browsing through our property search tool or enlisting the assistance of an estate agent.

Home Location

When considering a property, its location holds significant importance.

Take into account factors such as its proximity to schools, public transport options, and nearby amenities and facilities.

Home Condition

The condition of the property is another vital aspect to take into account.

Consider factors such as the age of the property, required repairs or renovations, and whether it is move-in ready or in need of improvements.

Home Value

Prior to making an offer on a property, it is important to assess its value to ensure you are making a fair investment.

This can be achieved by reviewing recent sale prices of comparable properties in the vicinity or by obtaining a professional property valuation.

Now You're Ready to Own

I hope this comprehensive first-time buyers guide has provided you with valuable insights and information to navigate the exciting journey of purchasing your first home.

From understanding the mortgage process and exploring financing options to finding the right property and managing associated costs, you are now equipped with essential knowledge to make informed decisions!

Remember to:

  • Prioritise your budget
  • Conduct thorough research
  • Seek professional advice when needed.


With careful planning and consideration, you can confidently take the necessary steps towards achieving your dream of homeownership.

Best of luck on this exciting new chapter of your life! 


James - Financial Enthusiast

James is a dedicated financial enthusiast. With a deep passion for financial analysis and investment strategies, he brings a unique perspective to his role in property development.