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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Deposit Requirements for First Time Buyers
If you want to purchase a home, you'll need a deposit.
The lowest deposit is usually 10% of the property's value, but putting down 15% or more can help you get the lowest mortgage rates.
Following the pandemic, more lenders request 15% or more, mainly due to concerns about economic uncertainties.
However, there are several support schemes and initiatives. Particularly in high-cost property markets such as London, it's extremely tough for first-time buyers to get onto the property ladder if they need a cash deposit of £70,000 or more.
In this guide, the Revolution Brokers team explains the typical deposit requirements; and what you can do if you don't have sufficient savings.
Are There Low Deposit Mortgages for First Time Buyers?
There are many options to help buy a property. You can secure a mortgage with a deposit of between 5% and 10% of the property value.
A 100% mortgage isn't a myth, but it is somewhat restricted and unlikely appropriate in most first-time buyer scenarios.
Options such as Help to Buy and the government mortgage guarantee scheme mean hundreds of new mortgage products are now available, with low-deposit deals and competitive interest rates.
During the Coronavirus pandemic, lenders withdraw 90% of all low-deposit mortgages from the market.
Now that property has stabilised, first-time buyers with small deposits have a much easier pathway to finding suitable interest deals.
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Can I Get a 95 LTV Mortgage First Time Buyer?
In the past, you'd have needed a guarantor, a rock-solid application or a second form of security to take out any high-risk mortgage with just a 5% deposit,
However, the mortgage guarantee scheme means that lenders are more open to considering these deals.
While you'll still pay a lot more interest with a 5% deposit than someone with 10% or more, it's a viable option.
There are mortgage deals for first-time buyers without arrangement fees with very attractive rates. The cheapest options are currently two-year deals, with the difference between that and a five-year fixed term of about 0.01%.
How Do 95 Mortgages for First Time Buyers Work?
Most first-time buyer lenders will calculate your mortgage to a maximum of 4.5 rimes tour annual income. However, that isn't set in stone, and some lenders use different calculation basis.
If you apply for a joint mortgage, they'll consider both incomes together to arrive at a maximum mortgage.
There are other criteria, so a lender will look at your age, employment status, credit history and debts before making an offer.
You can sometimes borrow more than four times your annual income - even a high street bank has offered a first time buyer mortgage at 5.5 times salary with a 10% deposit in the last year!
Give the Revolution team a call if you're unsure how much you can borrow or want to maximise our mortgage prospects. We'll match your circumstances with the most appropriate lenders who offer the income multiple you need to secure your required borrowing.
What are 10 Mortgages for First Time Buyers?
A 10 mortgage means a 10% deposit. This standard has been the minimum downpayment you need to purchase a property for many years but hasn't changed as property prices increase.
Deposits have risen far faster than inflation in the last decade, from around £11,000 to approximately £33,000 for the average first-time buyer.
Over 50 years, it’s now over two-thirds more expensive to buy a new home.
However, 10% deposit mortgages are now more widely available, and with Help to Buy and the government guarantee, there are several options to reduce your deposit requirement.
Which Banks Offer 10 Deposit Mortgages for First Time Buyers?
If you're interested in applying to the mortgage guarantee scheme, the lender isn't necessarily basing their rates on a 10% deposit.
Likewise, with Help to Buy, the mortgage provider receives a 25% deposit, split between your 5% contribution and the government support of 20%, so you can secure favourable rates using either of these schemes.
However, 95% is a high LTV value. While many more lenders are currently offering this product, it's still a potential risk - hence the government guarantee that means were you to end up in a repossession scenario, the lender could recoup their lost funds.
Here is what a 95% mortgage guarantee product looks like from a lender perspective:
- The lender has the assurance that the government will cover some of the costs if the lender loses money if the borrower doesn't keep up with their repayments.
- Properties would still have to be repossessed and sold, but the guarantee scheme would kick in if that sale didn't recover the outstanding amount.
- Government guarantees cover 95% of the lender's losses, but only on the value of the mortgage borrowing up to 80% of the property value.
For example, on a property worth £100,000 with a 95% LTV mortgage, the lender wouldn't have any guarantee on the first £80,000. If they were to make a loss, the government would guarantee 95% of the £15,000 balance.
Mortgage guarantees are available from April 2021 to December 2022 and are an alternative to the Help to Buy government mortgage scheme.
There are several lenders enrolled, with the scheme itself overseen by the British Business Bank.
The complication is that you can't simply apply to any participating bank with any more confidence than usual that they will accept your application.
Each lender will apply different criteria, so they'll need to assess eligibility and affordability and look at factors such as your employment structure, age, credit file, and property type.
Can I Secure 90 Mortgages for First Time Buyers?
A 90% mortgage will always be more expensive than a mortgage product with a more substantial deposit.
However, there are competitive rates available, usually with a fixed-term period. For example, we’ve seen rates on two-year fixed mortgage rates for first-time buyers drop by around 0.3% in a month.
You can also consider fee-free deals if you want to avoid paying arrangement fees or upfront lender costs.
It is well worth consulting an independent broker before taking up any of these incentivised offers, though, as there is usually a catch if one product looks substantially more attractive than another.
Most of the time, you'll see a balance between account fees (such as an application charge, exit penalty etc.) and the interest rate charged on our borrowing.
Great interest rates that look too good to be true often carry high arrangement costs and vice versa. The best way to ensure you're applying to the right lender, who can accept first-time buyer applicants, is to consult a whole-of-market broker with a complete overview of all the products on the market.
What is the Best Way to Get Competitive Rates on a Buy to Let Mortgage First Time Buyer?
First-time landlords can find it tricky to secure a mortgage - but it certainly isn't impossible!
Property investment can be tempting for all sorts of reasons, and it's essential to have a professional on your side to negotiate with lenders and ensure you're getting the best deal.
If you're looking for any first-time buyer mortgage with a low deposit and want to make sure you're not paying over the odds, the independent, accredited team at Revolution Finance Brokers can help.
Give us a call on 0330 304 3040 or drop a message to the team at [email protected], and we'll arrange a good time to talk.
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Brokers couldn't be easier:
As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.