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First Time Buyer Mortgages

Buying your first home is exciting, but can also be a stressful process, and is often best guided by experience. If you’re looking for your first-time buyer mortgage deals in the Berkshire area, let Simmonds Mortgages Services help you navigate the market and make the most of the mortgage deals available to you.

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Are you a first-time buyer?

Whether you are a first-time buyer or not is not as straightforward as it may sound. Mortgage lenders will consider you a first-time buyer if you have never owned or part-owned a home in the UK or anywhere else in the world.

This means that if you have inherited a home, shared ownership of a property with someone, or have been bought a home by someone else anywhere in the world, you will not qualify as a first-time buyer for mortgage purposes.

First time buyer mortgages

Simmonds Mortgage Services, first-time buyer mortgage brokers

Are you overwhelmed with all the options for mortgages? Using a mortgage adviser can help you access the most suitable mortgage for your circumstances. We’ll help you apply for a mortgage and manage the mortgage completion process with the most appropriate mortgage lender for you.


Simmonds Mortgage Services, first-time buyer mortgage brokers

How do mortgages work for first-time buyers?

There are a few steps involved when you apply for a mortgage so let’s look at what you need to do to achieve a mortgage offer.

How much can I borrow?

The first step is to find out how much a mortgage provider will be willing to lend you. This is known as an agreement in principle. Mortgage lenders will ask you about your annual or monthly income and expenses when deciding how much you can borrow.

An agreement in principle shows estate agents and sellers that you are serious about buying and you have the means to do so. You can apply for an agreement in principle without affecting your credit rating.

There will be other lending criteria to meet which may vary between lenders. Your age, occupation, time in your job, deposit, credit score and personal finances can all impact a lender’s decision on how much to loan you, over what mortgage term and at what initial interest rate. The lender will check your credit history using a credit reference agency to assess the level of risk.

Some lenders can lend up to 5 or 6 times your combined income as a maximum however the average is more like 4.5 to 5 times income. This can take into account PAYE income, self employed income or bonuses, commission and overtime.

Banks and other lenders often have a mortgage calculator on their websites so you can get an idea of how much you may be able to borrow. A mortgage calculator is not a substitute for an agreement in principle though.

Many lenders also have a minimum purchase price of around £40,000 for their mortgage prodcuts.

How much deposit do I need?

Many first-time borrowers find it challenging to save a mortgage deposit for their first property, especially if they are currently spending out on monthly rent. House prices continue to remain high so the more you can save, the better your chance of getting on the property ladder.

You should aim to save at least 5% of the total cost of the property as a deposit to get an affordable mortgage. Mortgage advisers may be able to find products with a lower borrower deposit but the larger your deposit, the lower the interest rates will be. If you can save more and get a lower loan to value, your monthly payments will be more manageable, especially if rates subsequently increase.

Buying a property with a very low deposit could put you at risk of a negative equity situation if property prices drop.

What is first-time buyer relief?

When buying a property, you’ll need to pay stamp duty of at least 5% for properties valued over £250,000. However, there is a relief available to first-time purchasers:

Purchase price UK-resident Non-UK resident:

  • £0-£425,000 0%-2%
  • £425,000-£625,000 5%-7%

if you are purchasing a property in Wales, you’ll pay Land Transaction Tax rather than Stamp Duty Land Tax with an allowance of £225,000. More information is available on the Welsh government website. In Scotland, this tax is known as Buildings Transaction Tax – get more information from the Scottish government website.

Other mortgage options for first-time buyers

Buying your first home can be challenging, so there are a few ways to make it easier to achieve.

Lifetime ISA

Open a Lifetime Individual Savings Account (LISA) before the age of 40 to help save your deposit. You can save up to £4,000 per tax year and this will be topped up by 25% by the government. Your LISA balance can only be accessed for first-time property purchases up to £450,000 or on retirement.

Joint mortgage

If you are unable to afford to buy a property just on your income, you could choose to make a mortgage application with a family member. This mortgage agreement means both borrowers sign the mortgage deed and own the property and both are responsible for making your monthly payment.

Joint borrower, sole proprietor

Another option is the JBSP also known as a joint borrower sole proprietor mortgage where two or more people are on the mortgage but only one person is the legal owner of the property. This arrangement tends to happen between close family members such as parents and children. Both borrowers are responsible for mortgage repayments.

Shared Ownership

This arrangement allows a first-time purchaser to buy a portion of a property using a mortgage and pay rent on the other portion, generally between 25% and 75%. Over time you can increase your owned share of the property and reduce the rent you pay.

Get on the property ladder with Simmonds Mortgage Services

Here are Simmonds Mortgage Services, we will ensure that when you apply for a mortgage, you do so with confidence and knowledge.

We will explain what’s happening at each step, and take as much of the stress out of the home-buying process as possible.

Get the best first-time buyer mortgage deals by calling us on 01184 693037 for a mortgage appointment or booking a short initial meeting to discuss your situation today. Your dream property may be closer than you think!

Yes, absolutely and this can help you budget your monthly repayments more easily.

While it is possible to get a buy-to-let mortgage if you've never owned a property in the past, it's less common. This means fewer lenders offer this and mortgage rates are likely to be higher than for a standard residential property mortgage deal.

Yes, an interest-only mortgage is possible but the pool of lenders you can choose from is smaller so these products are likely to be more expensive than standard repayment products.

Some will, it depends on the property value. If your home is valued at £425,000 or below, you will not need to pay stamp duty. If your property value sits between £425,001 and £625,000 you will pay 5% stamp duty on the element above £425,001, but nothing on the first £425,000, as this is classed as stamp duty relief for first-time buyers.

If your property value is £625,001 or more, you will pay the full rate of stamp duty on your entire purchase.

Budget for mortgage valuation fees, property survey costs, legal fees and removal costs when buying a property. Your lender will probably also require you to take buildings insurance.

The mortgage guarantee scheme is run by the government and provides a guarantee for lenders in the event that you default on your mortgage payments. There are eligibility criteria and it is only open to first time purchasers. You can only get a repayment mortgage on this scheme, not an interest-only mortgage.

Critical illness is an insurance product you may be offered by your mortgage lender. This can help you meet your financial commitments in the event that you suffer a serious illness during the term of the policy.

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Get in touch with us by calling 0118 469 3037 for a free chat about your specific circumstances. Let us help you secure your dream home.

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