What Mortgage is best for a first time buyer?

Buying a home in the UK as a first-time buyer can be challenging, especially when it comes to choosing the right mortgage. With so many different types of mortgages available, it can be difficult to know where to start. 

 

Common Mortgage Options for First Time Buyers in the UK

 

1. Help to Buy Equity Loan

 

This has now been retired but is still something we get asked about so are mentioning it now. The Help to Buy Equity Loan scheme was a government-backed initiative that aimed to help first-time buyers get on the property ladder. With this scheme, the government provided an equity loan of up to 20% of the purchase price of a new build home. This meant that first-time buyers only needed to provide a 5% deposit, with a 75% mortgage covering the rest. The equity loan was interest-free for the first five years.

 

1. Lifetime ISA

 

The Lifetime ISA is a savings account that allows first-time buyers to save up to £4,000 each year towards the purchase of their first home. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The bonus is paid when you buy your first home, and the money can be used towards the deposit or other costs associated with buying a home.

 

1. Shared Ownership

 

Shared Ownership is a government-backed scheme that allows first-time buyers to buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share. This can make buying a home more affordable, as the deposit and mortgage payments will be based on the share of the property that you own.

 

1. Fixed-Rate Mortgage

 

A fixed-rate mortgage is a type of mortgage where the interest rate remains the same throughout the term of the mortgage. This means that your monthly mortgage payment will remain the same, which can make budgeting easier. Fixed-rate mortgages are a good option for first-time buyers who want stability and predictability in their mortgage payments.

 

As a first-time buyer in the UK, there are several different types of mortgages and schemes available. The Help to Buy Equity Loan (now retired), Lifetime ISA, and Shared Ownership schemes are all government-backed initiatives aimed at making it easier for first-time buyers to get on the property ladder. A fixed-rate mortgage is also a good option for first-time buyers who want stability in their mortgage payments. When choosing a mortgage, it’s important to consider your personal circumstances and seek advice from a qualified mortgage advisor.

Are you looking for more information regarding the right mortgage for you? Get in touch with Peak Mortgages today.