Let’s answer those two key questions.
How much can I borrow with a First Time Buyer Mortgage?
- The short answer is, about four and a half times your income.
- But some lenders may offer as much as five and a half times your income.
Your Borrowing = 4.5 to 5.5 x your income
What do lenders consider as income?
If you are Employed
- Bonus income may be assessed at much less.
- Typically, lenders consider just half of variable income.
- Lenders may deduct expenses, such as childcare costs.
If you are Self Employed
- Lenders will consider either your salary, dividends, profit, or profit on ordinary activities before tax.
- Some, or all, of these are assessed then the multiple applied.
- If you’re a Company Director dividend’s may be effectively grossed up to give you greater borrowing potential.
How much will a First Time Buyer Mortgage cost?
- The structure of your mortgage (repayment, interest-only, or a combination) has a big impact on how much your monthly repayments will be.
- The other aspect to consider is the type of mortgage product, either a fixed or variable rate, which will help determine the level your monthly payments.
Need advice?
Speak to your first time buyer mortgage broker today to find out how much you can borrow and how much it will cost as a First Time Buyer.
First Time Buyer Mortgage simple illustrations
Here are some simple examples of how a lender could assess your income.
1. Employed: no Bonus
| Annual salary |
£100,000 |
| Multiplier |
£100,000 x 4.5 |
| Estimated Borrowing |
£450,000 |
2. Employed: with Bonus
| Basic salary Bonus |
£50,000
£50,000 |
| Multiplier: salary |
£50,000 x 4.5 |
| Borrowing: salary |
£225,000 |
| Bonus as assessed by lender |
£25,000 |
| Multiplier: bonus |
£25,000 x 4.5 |
| Borrowing: bonus |
£112,500 |
| Estimated Borrowing |
£337,500 |
It is important to note that this is a ‘standard’ starting point. Some lenders will offer a lot more, some less, but this gives you a good yardstick to measure yourself by.
Your First Time Buyer mortgage structure
One of the first things to consider is your repayment vehicle.
Do you want to opt for
- a repayment loan?
- an interest only loan?
- part & part which is a combination of the two?
What is a Repayment mortgage?
You make monthly payments and at the end of the term the loan is repaid.
With a repayment mortgage the monthly payments are higher but with less risk.
What is an Interest Only mortgage?
You simply pay the interest on the mortgage loan and look to pay off the loan later with say, the sale of property, investments or bonuses.
With an interest-only mortgage the monthly repayments are lower but is assessed as higher risk.
Your mortgage product
You will also need to consider which type of mortgage product is best for you as this determines your monthly payments.
- Fixed Rate Mortgage. Your repayments are set for 2,5, 10 years.
- Variable mortgage. This is sometimes cheaper, but the rate can go up or down depending on the market, and is often penalty free if you want to remortgage
Rather than asking how much it will cost, consider how much can you afford. Your first time buyer mortgage broker will then structure your mortgage appropriately, based on your risk profile.
What first time buyer mortgage rates can I get?
- The actual first time buyer mortgage rates you will be offered will be dependent on your personal circumstance and deposit level. Your broker will advise you on mortgage deals for first time buyers.
- Therefore, think about how much you want to spend each month on your mortgage repayments. Your dedicated first time buyer mortgage broker will advise you on mortgage interest rates for first time buyers appropriate for you.
- Only brokers have access to a range of lenders in the market, and we have access to exclusive first time buyer mortgage rates.
How much deposit do I need as a First Time Buyer?
- The long answer is that it is dependent on your circumstances: purchase price, income, and property type.
- The short answer is – about 5%-10%.
- As a rule, some high street lenders have an offering for a First Time Buyer Mortgage for a 5% deposit. The maximum property value they will go to on this ranges from as low as £250,000 up to around £600,000.
- Lenders purely take a risk-based approach to pricing, meaning from a starting point of a 5% deposit, every additional 5% deposit you put down increases the range of lenders you can choose from and therefore decrease the cost of the loan as you are determined as lower risk.
- Lenders consider you a low risk buyer when you put down a 25% deposit or more.
- The last key figure is a 40% deposit. Once you have a 40% + deposit you get the very cheapest pricing available and very often the exceptionally low rates you see on best buy tables.
We are here to help you with mortgage deals for first time buyers. As a top-rated first time buyer mortgage broker, we are here to guide you on every step of your first time buyer journey.
- Your dedicated first time buyer mortgage broker will provide you with detailed, personalised advice on how much you can borrow to purchase your first home and source exclusive mortgage deals for first time buyers.
- In today’s mortgage market, each borrower is assessed on their individual affordability merits. Once we have talked through your personal circumstances, we will advise you on mortgage interest rates for first time buyers suitable for you.
- This means you get the right advice crucial to ensuring you get the right First Time Buyer Mortgage for your circumstances.
For First Time Buyer Mortgage Advice
- Rose Capital Partners takes the time to understand your mortgage goals to secure the optimal mortgage deals for first time buyers.
- Our first time buyer mortgage advice is second to none. We will advise you on mortgage interest rates for first time buyers appropriate for you.
- Our aim is to maximise your borrowing potential, minimise your monthly payments and work with you throughout the lifecycle of the loan to manage down the mortgage.
- You are treated as a valued client, not a transaction, and dealt with by an experienced, empathetic person, not an algorithm.
- We have access to competitive deals and with no affiliation to third parties. We will always act in the best interests of you, our clients to give you the best first time buyer mortgage advice possible to achieve the right mortgage for your life’s goals.
Your property may be repossessed if you do not keep up repayments on your mortgage.
