First-Time Buyer Support

Buying a first home is a significant financial commitment. Although saving a deposit and meeting affordability requirements can be challenging, several routes may be available depending on your circumstances, location and future plans.

At a glance

Common first-time buyer challenges

• Building and evidencing a sufficient deposit.
• Understanding how lenders assess affordability.
• Allowing for purchase costs as well as the deposit.
• Maintaining an appropriate credit profile.
• Choosing a suitable property and mortgage structure.
• Understanding the legal and survey process.

The objective is not simply to borrow the maximum available. It is to establish a comfortable budget that remains manageable alongside household costs and future plans.

Building a deposit

A deposit is your contribution toward the purchase price. A larger deposit can reduce the loan-to-value and may widen product choice, although affordability and lender criteria still apply.

Possible sources include:

• Personal savings.
• A Lifetime ISA, where eligible.
• A genuine gift from family.
• Proceeds from permitted investments or assets.
• An accepted affordable home ownership arrangement.

Lenders and conveyancers will need to understand the source of funds and may request statements and supporting evidence.

Lifetime ISA

A Lifetime ISA can help eligible first-time buyers save for a qualifying first home. Current rules include a government bonus on eligible contributions, age and contribution conditions, a property-price limit, a minimum period since the first payment, main-residence requirements and withdrawal restrictions.

• Confirm that the account and buyer meet the current rules.
• Check that the full purchase price is within the permitted limit, including for shared ownership.
• Tell the conveyancer early so the withdrawal can be arranged properly.
• Understand any withdrawal charge for a non-qualifying purpose.
• Do not exchange contracts until the conveyancer is satisfied the funds will be available.

Low-deposit mortgages

Some lenders offer mortgages requiring a relatively small deposit. A smaller deposit means a higher loan-to-value, which can affect pricing, criteria and future flexibility. Consider the monthly payment and total cost, the risk of limited equity if values fall, fees and early repayment charges, options when the initial deal ends and whether retaining more savings for costs and emergencies is appropriate.

A low deposit does not guarantee approval. The lender will still assess income, expenditure, credit history, the property and the overall application.

Gifted deposits

A gifted deposit is money provided without an expectation of repayment or ownership, subject to the lender’s and conveyancer’s requirements. The donor may need to provide identification, address evidence, bank statements showing the source of funds and a declaration confirming the gift and whether any interest in the property is expected.

If money must be repaid, it may be treated as a loan rather than a gift and must be disclosed.

Joint borrower sole proprietor

This arrangement allows one or more supporting borrowers to join the mortgage while legal ownership remains with the proprietor or proprietors named on the title. Supporting income may be considered in affordability, but all borrowers remain responsible for the mortgage debt.

• The commitment can affect a supporting borrower’s future affordability and credit position.
• Removing a supporting borrower usually requires lender approval and a fresh assessment.
• Independent legal and tax advice may be appropriate.
• Property-tax treatment should be confirmed by the conveyancer.

Guarantor and family-security arrangements

Some lenders offer arrangements where family members support a mortgage using income, savings or property. The structure, risks and availability vary. Everyone should understand who is liable if payments are missed, whether savings are restricted, whether another property is used as security, how future borrowing is affected and how the supporter can be released. Independent legal advice may be required or recommended.

Shared ownership

Shared ownership allows an eligible buyer to purchase a share of a home and pay rent on the remaining share. Service charges and other housing costs may also apply. Consider the mortgage, rent and service charge together, along with lease terms, repair responsibilities, restrictions, staircasing costs, changing charges, eligibility and regional differences.

A smaller initial mortgage does not necessarily mean lower total monthly housing costs. Obtain legal or tax advice on property-tax choices and consequences.

Discounted purchase and local schemes

First Homes and other local or regional initiatives may offer qualifying buyers a discounted purchase or another form of support. Availability is specific to the property and location. Conditions may cover first-time buyer status, household income, local connection or key-worker status, purchase price, mortgage requirements and resale restrictions.

Confirm current rules with the provider, local authority, mortgage adviser and conveyancer before relying on a discount.

Mortgage Guarantee Scheme

The permanent Mortgage Guarantee Scheme supports participating lenders in offering eligible high loan-to-value residential mortgages. It is a guarantee to the lender, not the borrower. It does not guarantee acceptance, replace affordability or credit assessment, protect against negative equity or ensure a participating product is the most suitable.

Compare scheme-backed and other suitable products on rate, fees, criteria, flexibility and overall cost.

Getting mortgage ready

Establish a comfortable budget

Include mortgage payments, council tax, utilities, insurance, service or estate charges, travel, childcare, household commitments, maintenance, repairs and emergency savings.

Review credit information

Check your credit reports, electoral roll information, existing borrowing and payment history. Query information you believe is inaccurate and avoid unnecessary new credit before an application.

Gather documents

Common requirements include proof of identity and address, income evidence, bank statements, deposit and source-of-funds evidence, and details of loans, credit cards and other commitments. Tell your adviser early about variable income, adverse credit, gifted deposits, family support or expected changes.

Agreement in Principle

An Agreement in Principle, also called a Decision in Principle, is an initial lender indication based on the information entered and usually a credit search. It can help establish a likely budget, but it is not a mortgage offer and does not guarantee approval. The full application, evidence and property must still be assessed.

Costs beyond the deposit

Keep a sensible financial reserve rather than using every available pound for the deposit.

The buying journey

1. Set a comfortable budget and gather evidence.
2. Explore deposit, family-support and scheme options.
3. Obtain an Agreement in Principle where appropriate.
4. Find a property and make an offer subject to contract.
5. Submit the full mortgage application.
6. Arrange the lender valuation and consider an independent survey.
7. Instruct a solicitor or conveyancer to complete the legal work.
8. Review the mortgage offer and legal report before becoming committed.
9. Arrange buildings insurance when required.
10. Exchange contracts and complete under the process applying in the relevant UK nation.

Practical checklist

Before property viewings

• Set a comfortable monthly budget.
• Confirm the deposit source and retain evidence.
• Allow for purchase costs and contingency.
• Review credit reports and gather income and identity documents.
• Discuss family support before relying on it.
• Check current scheme eligibility.
• Obtain an Agreement in Principle where appropriate.

Before exchange or completion

• Read the mortgage offer and legal report.
• Confirm the survey and any specialist reports.
• Ensure all funds are available.
• Check buildings insurance requirements.
• Confirm the completion date and direct debit arrangements.
• Retain an emergency reserve where possible.

Questions to ask

• What monthly payment is comfortable?
• How would the budget cope with higher costs or lower income?
• Have all purchase and ownership costs been included?
• Is the deposit source acceptable and fully evidenced?
• Are family supporters clear about their responsibilities and risks?
• Do scheme restrictions fit the long-term plan?
• Is the property likely to meet the lender’s requirements?
• What financial reserve will remain after completion?
• Is payment certainty or flexibility more important?
• How long is the property likely to meet the household’s needs?

Glossary

This guide is for informational purposes only and was accurate at the date of publication. Please seek personalised advice before making financial decisions.