Best mortgages for first-time buyers

The average UK house hunter estimates they will hit 36-years old before being in a position to buy their first home, according to our latest research here at MoneySuperMarket. And in the South West region, it's even older at 41. 

The recent resurgence in the housing market - especially in London - is making things tougher to get a footing on the first rung of the property ladder, and with more mortgages available today than this time last year, there are more buyers competing too as they are able to raise the funds they need. 

Getting the right mortgage deal can, by itself however,  prove a challenge - but it's one that's important to get right. The deal you choose will have a big impact not just on your pocket now but on your flexibility and choices for the years ahead. We've made it easier but rounding up today's top deals for first-time buyers.

Top mortgages for those with small deposits

Soaring property prices have meant that saving up a big enough deposit to get on the property ladder can be really difficult.

top tips for first time buyers

The government’s Help to Buy scheme has made life a bit easier by helping those (first-timers and home movers) who can only afford to put down a deposit of 5%.

It works like this: you put down a 5% deposit and the government provides a guarantee to the mortgage lender for up to a further 15%.

There’s also a Help to Buy equity loan scheme, where again you only need to put down a 5%, and the government will provide a further loan of up to 20%.

Current Help to Buy deals include Santander’s two-year tracker deal with a current rate of 4.74% and no arrangement fee.

However, if you’d rather have the peace of mind of a fixed rate mortgage, where rates (and your monthly repayment) won’t change, HSBC has a two-year fixed rate Help to Buy deal at 4.79%, with a £99 arrangement fee. If you want to lock in for longer, the bank also offers a 5- year fixed rate at 5.19%, again with a £99 fee.

Best mortgages for those with a 10% deposit

If you’ve managed to scrape together a 10% deposit, then you will have a much wider choice of mortgage options, and at lower rates.

HSBC, for example, is offering a discounted deal with a payable rate of 2.89% to those with a 10% deposit. However, this mortgage does have a hefty £999 arrangement fee which you’ll need to factor in.

If you are worried about rates rising soon, the bank has a 3.59% fixed two-year deal, but with an eye-watering £1,499 arrangement fee. If you can’t afford a fee that big, then you might want to consider Britannia’s two-year fixed rate deal at 3.99%, which has no fee at all.  Woolwich is also offering a two-year fixed rate deal to first-time buyers with a 10% deposit, but it has a higher rate of 4.19% and a £999 arrangement fee.

Lowest rates if you’ve got a 15% or 20% deposit

Having a 15% or 20% deposit puts you in an even stronger financial position, with lenders offering two-year fixed rates under 3%.

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For example, Britannia is offering a 2.89% two-year fixed rate deal to those with at least 15% to put down, although you will have to pay a £999 arrangement fee.

Similarly, HSBC currently has a 2.99% two-year fix for first-time buyers with a 15% deposit, but with a steeper £1,499 fee. Both these deals are fixed until July 31, 2016.

If you want a marginally longer fix, then Halifax’s deal, which ends on September 30, 2016, is fixed at 3.28%, and again is available if you have a 15% deposit. However, there is a £1,499 arrangement fee and a £265 booking fee.

Things get even better if you have a 20% deposit saved up. At this level, Britannia is offering a two-year fixed at just 2.39%, with a £999 arrangement fee, while HSBC has a two-year fix at 2.49%, again with a £999 fee. If you are looking for a lower fee, then Santander is offering a two-year fixed rate deal at 2.84%, with a £495 fee.

If your view is that interest rates will stay low for some time, you could chance a lifetime tracker instead. These deals track the Bank of England base rate, plus a set percentage, for the term of the deal.

HSBC, for example, is offering first-timers with a 15% to put down a lifetime tracker with a current payable rate of 3.29%, with no early repayment penalties. This deal has a £1,499 arrangement fee.

Very best first-time buyer deals

Most first-timers can only dream of having 40% deposit, but if you are among the lucky ones that do, perhaps due to an inheritance or financial help from family, you will have the pick of the very cheapest mortgage deals.

HSBC, for example is offering a tiny fixed rate of just 1.59% for two years, although you will have to stump up a £1,999 fee.

The bank’s two year discounted deal has an even lower payable rate at 1.49%, and a lower £999 fee. But, as this is a variable rate deal, it could go up if interest rates do.

Similarly, Woolwich offers a three-year tracker deal with a current payable rate of 1.79% and an arrangement fee of £1,000, while Santander has a 1.79% tracker deal, with a lower £995 arrangement fee.

Seek advice

Don’t worry about mortgage advice costing you – as it doesn’t have to. Our mortgage broker partner, London and Country offers telephone advice for free on 0844 776 1952. And, of course, it also costs nothing to compare the best mortgage deals for different deposits online.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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