Why now’s a better time to buy your first home than 2012

Hoping to take your first step on to the property ladder this year? You couldn’t have timed it better. Compared to three years ago, you’ll now have double the number of mortgages to choose from – and the deals will come with much lower rates.

Why now’s a better time to buy your first home than 2012

We've crunched the numbers and found there are 2,776 separate first-time buyer mortgage deals on the market today – that’s up from 1,324 in April 2012. The increase is partly thanks to the government’s Help to Buy scheme, which you can read more about here.

We also found that the average cost of a first-time buyer mortgage has dropped by one percentage point since 2012 to 3.26%.

Small deposit a smaller problem

Not all first-timers have trouble scraping together a deposit. Three years ago they managed to put down an average of 22% and today it’s only slightly less at 21%. But if you’re nowhere near entering that camp and can only afford 5% on the cost of your first home, things are looking better.

The number of 95% mortgages has also shot up since 2012. There are now 170 of these deals, compared to just 31 three years ago, our research found. This is partly due to the increase in Help to Buy products offered by lenders. The average cost of 95% mortgages has also fallen by 1.04% to an average of 4.72%.

Check out Mark Hooson's gallery of British homes you can buy if your 5% deposit only amounts to £5,000.

The government’s Help to Buy ISA means there will be even more help for first-time buyers looking to save up a deposit. Launching this autumn, the Help to Buy ISA will allow first-time buyers to save up to £200 a month towards their first home, with the government topping up contributions by another 25%. In other words, for every £200 you pay in, the government will pay a further £50.

Factor in the fees!

When you compare mortgages, don’t be led solely by the cheapest rate on offer. Attached fees can be expensive – and especially where the rate is super-low. You can factor in the fee by doing the below:

  • Find out what your monthly mortgage payments will be using a mortgage calculator
  • Multiply this figure by the number of months the deal lasts for (say, 24 or 36)
  • Add the fee on top
  • This gives you the true cost of the deal over the term
  • Repeat for the next best comparable deals

Remember also the best deals will be reserved for applicants with a really clean credit score. You can apply for a copy of yours here.

But, warned our head of banking, Kevin Mountford, while first-time buyers have a better range of mortgages available,  lenders’ criteria is still tough. “Since the introduction of the Mortgage Market Review in April last year, borrowers not only need to have a strong credit score, they also need to prove that they can afford the mortgage they’re applying for – not only at its current rate, but if rates should rise in the future.”

Watch our video for the effect that interest rates could have on the cost of your mortgage repayments.

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.


Did you enjoy that? Why not share this article

Take control of your energy bills

Our handy tips and tools will help make sure you never overpay again

Popular guides