Best first-time buyer mortgages available right now - January 2024

Finding the best first-time buyer mortgage can feel daunting, especially when there has been such much turmoil in the mortgage market over the last year.

But despite that turbulence, there are still plenty of mortgages available for first-time buyers with small deposits (or even no deposit at all) and for those who need help paying mortgage fees. 

Interest rates rose throughout 2023 to combat rising inflation, while things are levelling out in 2024, it is still expected that mortgage rates will continue at current rates. The Bank of England increased the base rate multiple times in 2023 and it now sits at 5.25%.

Some mortgage products were removed from the market when interest rates were hiked, as lenders were unsure how high they would go. David Hollingworth of L&C Mortgages says: ‘Most lenders are still offering mortgage deals to those with small deposits so there is still a good range of choice. The government has extended its 95% mortgage guarantee to lenders, that was due to end in December, for another year which gives lenders more confidence to lend to first-time buyers.

‘Since mortgage rates increased, however, some lenders’ credit scoring and criteria has become stricter. That doesn’t mean first-time buyers will be refused a loan but they may need a higher credit score than they would have previously to be offered certain loan amounts.’

So if you’re looking to buy a house for the first time, it pays to do your research. Some mortgages have special rules exclusively for first-time buyers to make it easier to get on the ladder. Others offer a lower rate in exchange for a higher fee, while some banks give borrowers cash or a free valuation as an incentive. It’s also a good idea to make yourself as attractive a borrower as possible - if you’re not sure where to start, here’s how to boost your chances of mortgage approval. 

Best first-time buyer mortgages January 2024

Rates are subject to change, but were correct at the time of writing. These options are for illustrative purposes only, speak to your lender or a mortgage broker to find the best mortgage deal for your circumstances.   

Early repayment charges apply. This fixed rate is offered at a discount to its standard rates for borrowers choosing its homebuying bundle. To qualify you must use its conveyancing service. 

Early repayment charges apply. This deal comes with £500 cash back on completion. A rate of 4.44% is available for a £999 fee.

Five-year fixed rates are currently cheaper than two-year fixes because rates are expected to fall during the term of the mortgage deal. Some borrowers may need to opt for the cheapest rate now to fit their budget. Speak to a broker before locking into a five-year – it is expensive to leave early.

Early repayment charges apply. This deal comes with £250. A five-year option is available at 4.69%. 

There are no early repayment charges. Free valuation and £500 cash back.

This deal tracks the Bank of England base rate (currently 5.25%) by +0.69%. If the base rate rises again (the next review is 1 February) your rate will also rise. Because there are no early repayment charges you can move to a fixed rate without penalty if the monthly payment rises too high for your budget. 

Early repayment charges apply. This fixed rate is offered at a discount to its standard rates for borrowers choosing its homebuying bundle. This means you must use its conveyancing service.

Two and three-year deals are available at 5.88% and 5.40% respectively.

Borrowers should take advice from a mortgage broker before buying a property with a 5% deposit. House prices in some areas have already fallen, while forecasters predict that prices could fall further. You can offset the risk of house prices falling by discounting the offer you make to the seller.

Should first time buyers choose a fixed-rate mortgage?

Even though inflation dropped to 4.2% in the 12 months to November, household budgets are still under pressure so the type of mortgage you choose will depend on multiple factors. Whether you prefer a fixed or variable rate depends on your financial position and your attitude towards the risk of rising interest rates.   

Fixed rate mortgages, give borrowers certainty over their monthly budget for a period of time, but some variable rates may be cheaper. 

Chris Sykes, technical director, Private Finance, says: 'First-time buyers should bear in mind there are talks that property prices may fall, so if you're buying a home with a 5% deposit at the moment I would generally recommend that borrowers choose a five-year fixed rate. This allows for a recovery in house prices if there has been a reduction in property values over the short term and means more of the mortgage will have been paid by the time you come to remortgage. This gives you a better chance of avoiding ending up in negative equity and being stuck on a high interest rate.'

Not sure how much you'll be able to borrow? Use our mortgage calculator as a guide.

How to find the best first-time buyer mortgage rates

You can search online for the best first-time buyer mortgage rates using a price comparison website. By submitting basic details such as your annual salary, credit commitments and the value of your deposit you’ll find out how much you can spend on a house and which lenders are offering the cheapest deals.

You can also use an online mortgage broker. After completing an online questionnaire and a credit check you’ll be sent a list of mortgage deals with the cheapest rates tailored to your circumstances.

Or you can ask a traditional mortgage broker to search for the best deals on your behalf. After a phone call or face-to-face interview, they will select the best deals for your circumstances rather than just the lowest rates.

What kind of first-time buyer mortgage could I get?

Banks and building societies typically offer first-time buyers a mortgage that is between 4.49 and 4.75 times their annual salary. Some lenders will offer up to 5.5 times salary for first-time buyers with larger deposits or higher salaries.

Lenders also offer a range of low or no deposit deals, fee-free options, cashback incentives and mortgage terms of up to 40 years if you want to keep your monthly repayments low. 

There are also lots of mortgages designed to specifically help first-time buyers or those struggling to raise a deposit or pass affordability checks.

Family assist mortgages

Barclays, Lloyds and Halifax offer options where parents can deposit savings with their mortgage lender for a fixed term, usually in line with the term of the fixed rate. By doing so the first-time buyer can put down little to no deposit. At the end of the fixed term, if the first-time buyer is up to date with their payments, the parents get their savings back with interest.

Joint borrower sole proprietor

Some mortgage lenders also allow parents to join their children on the mortgage application to boost their income if they are still working or have sufficient retirement income. By doing so, parents are agreeing to pay the mortgage if their children cannot but they do not own the property.

First Homes Scheme

This is a government scheme which involves the building of new homes specifically to be sold at a discount of at least 30% (can be increased up to 50% by the local council).

This scheme is only available to first-time buyers. Priority is also given to serving members of the armed forces and key workers.

Shared Ownership

Under the shared ownership scheme, a first-time buyer can purchase a share of the property and pay rent on the remaining share. A deposit is still required and the first-time buyer must be able to afford the mortgage and rent but it can be a good way to buy your first property as you don’t have to find the money for the full property value.