First-time buyers: finding the right mortgage

A new low-deposit mortgage from Santander could open the door for thousands of first-time buyers — here's what the deal offers and what to watch out for.

The whole process of buying a home is a daunting prospect for most people — not least because there is so much to consider, and because it now takes so long to reach the point of receiving the keys on completion day.

For first-time buyers, it is quite likely to feel even more stressful since, by definition, they have no prior experience of the process, except perhaps as a bystander watching family or friends go through it.

One of the key issues for any homebuyer is how the purchase is going to be financed. Buying a home is, for most people, the single greatest financial investment they will ever make.

For first-time buyers, the challenge is compounded by high rental costs that leave very little room to build a deposit, alongside house price inflation that has consistently outpaced average wage growth. The result is that many properties quickly fall out of reach.

To help address this, various government schemes exist to make homeownership more affordable. Mortgage lenders also regularly offer products specifically aimed at first-time buyers, who represent a significant share of buyer demand at any given time.

Now comes the news from financial institution Santander that they are offering a new mortgage product aimed squarely at first-time buyers, requiring just a 2% deposit to get started. Here is what you need to know about the offer:

• You must be a first-time buyer.
• The minimum deposit is £10,000.
• You can borrow between £190,001 and £500,000.
• The maximum loan-to-value (LTV) ratio is 98%. For example, if you want to buy a home priced at £320,000 and plan to borrow £300,000, your LTV would be 93.75%.
• The mortgage is set at a five-year fixed rate, with potential early repayment charges if you pay it off ahead of schedule.
• The offer is not available for flats, new-build homes or properties in Northern Ireland.
• If buying with another person, all applicants must be first-time buyers — that is, none can have previously bought or owned a property in their name.

As with any loan secured against a property, defaulting on mortgage payments may result in repossession. That said, products like this are likely to become more widely available as lenders compete for the first-time buyer market. It is always worth speaking to an independent mortgage adviser who can help you find the right product for your circumstances.

Homeward Legal's conveyancers will begin work on your case as soon as you accept your quote and instruct them. Your quote will not change — what you are quoted is what you pay for the standard conveyancing process, so you can budget with confidence. Should any additional reports be needed, your solicitor will discuss those costs as they arise.

Homeward Legal also operates a 'no completion, no fee' promise — if your purchase does not reach completion, you will not be charged.

Call us on or use our online quote generator for a quick estimate.