First time buyer mortgages
Thinking about buying your first property? Our range of first time buyer mortgage deals could help you get the keys to your new home.
Key steps to buying your first home.
You could lose your home if you don’t keep up your mortgage repayments
Common questions about buying your first home
As long as one person applying has never owned a property before, you can apply for a First Time Buyer mortgage with Lloyds Bank.
You’ll need a deposit of at least 5% of the property’s value, but if you can afford more than 5%, you can often get a lower initial interest rate.
We’re supporting the Government’s mortgage guarantee scheme, if you only have a deposit of at least 5% but less than 10%. The scheme is expected to accept applications until 31 December 2022, however, it may be withdrawn earlier. You can apply for a mortgage under the scheme by following our usual application process.
If you’re planning to put down a deposit between 5% and 10%, to qualify for the Mortgage Guarantee Scheme you’ll need to be:
- A first-time buyer
- Thinking about borrowing less than £570,000
- Buying a property which isn’t a new build flat
- Buying a property which isn’t Shared Ownership, Shared Equity, Right to Buy or buy to let
- Thinking about getting a repayment mortgage and not interest only.
Lending is subject to an affordability assessment, credit score and a full mortgage application.
You must be at least 18 years old to apply for a mortgage, and your mortgage must usually end before you reach 80 years of age. If your mortgage term extends past your 70th birthday or when you plan to retire - whichever happens sooner - we'll look at your retirement or employment income to make sure that you can afford the monthly payments. If you’re taking out a joint mortgage, we take the age of the oldest person into account.
We will only lend you a percentage of what the property is worth, so you will need to put down some of your own money towards the cost. We call this a deposit. Your deposit should be at least 5% of the property’s value (unless you’re applying for our Lend a Hand mortgage). If you can put down more than 5%, you can often get a lower initial interest rate.
However, the more deposit you put down the less you have to borrow. This will ultimately save you money and you can often get a cheaper mortgage product.
As well as your deposit, there are other costs associated with buying a property and taking out a mortgage.
Typical ones that apply to most buyers include conveyancing fees, Stamp Duty Land Tax/Land and Buildings Transaction Tax (properties in Scotland), valuation fees and Land Registry fees.
Need help saving for your deposit?
Lend a Hand Mortgages
With Lend a Hand, your mortgage payments stay the same for 3 years, and you don’t need to save for your own deposit. Instead, a family member can put down 10% of the cost of your home, up to £500,000, which they’ll get back plus interest after 3 years (subject to conditions). Learn more about the full Lend a Hand details and conditions.
An Agreement in Principle (AIP) provides you with a personalised commitment-free indication of how much we might be able to lend you. If you're buying a home it'll give you a clear idea of which properties you could afford. Estate agents will often ask to see an AIP to show that you are a committed buyer.
We do what's called a soft credit check as part of the process. Soft credit checks can only be seen by yourself on your credit report and do not affect your credit rating or ability to borrow from other lenders or ourselves in the future, even if you're declined an AIP on this occasion.
An Agreement in Principle, also known as a 'Decision in Principle' or 'Mortgage Promise', is useful if you haven’t found a property you want to buy but would like to know how much you could borrow.
All we need is a few personal details about you and anyone else who will be named on the mortgage. Then we’ll contact a credit reference agency for a credit search and give you a credit score. If you reach our pass mark, we’ll give you a certificate that you can use to show a seller you can get a loan.
A mortgage offer is issued by a lender once your application has been received and necessary checks, such as a valuation and confirmation of your details, have been carried out. It sets out the terms under which the lender is prepared to offer you a loan.
The property you buy must be located within the UK and loans can only be used to buy your main residential home or for purposes relating to this home.
We will consider lending you money to buy different types of property. We may ask you to provide a bigger deposit on some types of property than others.
Any loan we make is subject to a property valuation.
Looking for a property can be daunting – think about:
- What is important to you?
- Where do you want to live?
- How much space do you need?
- How much work are you willing to do on the property?
- These are all questions you need to consider when looking for a property.
Our house viewing checklist may be useful when you start to view properties. It will help you keep track of the various properties you view.
Also look at our house-viewing tips (PDF, 45KB).
While we will consider many types of property, we have a responsibility to ensure that a property is suitable security for a mortgage.
As a result, we will not lend against properties where the lower of the valuation or purchase price is below £40,000.
Mortgages can last for a long time, so it is important you get the one that is right for you. You will need to think about such things as the type of loan, how long you want it for and what type of product you would like.
Methods of repayment - there are three different ways of repaying your mortgage. These are repayment, interest-only, and a combination of repayment and interest-only.
Mortgage terms - mortgage terms of up to 40 years are available. How long the mortgage lasts will affect your monthly payments and the total cost of the mortgage.
With a repayment mortgage, the longer the term, the lower the monthly payment. However, it will take you longer to pay off the loan so you will pay more interest. This means it will cost you more over the life of your mortgage.
With an interest-only mortgage, the length of the term makes no difference to the monthly payments because these are only paying off the interest charges and not the loan itself.
With an interest-only mortgage your mortgage term needs to match the time when you will have enough money in your repayment plan(s) to repay the loan.
Mortgage products - we may have different types of mortgage products with different types of interest rates. These change from time to time and we'll give you details of the current range when you apply.
Depending on the mortgage product you chose, you may have to pay an early repayment charge if you repay all or part of your mortgage early or we agree you can change products.
Product incentives - from time to time we may offer mortgage products that include an incentive. The interest rate for products with incentives may sometimes be slightly higher than for products without incentives.
So you will need to consider whether the incentive available at the start of the mortgage is more important to you than the slightly lower interest rate you may get during the product rate period without the incentive.
Your mortgage adviser will ask you about your preferences and discuss your needs and circumstances before deciding which mortgage to recommend to you.
Look at key features to help you understand more about our mortgages.
You will usually be asked for conveyancer details to take care of the important legal work when you apply for your mortgage.
You will need to choose a conveyancer from our approved list. So it is worth checking with us before you instruct a conveyancer.
A mortgage has one key difference to other loans – it is secured against your home. If you cannot keep up with your monthly repayments or you get into financial difficulties you should contact us straight away so we can give you the help you need.
Remember, house prices can go down as well as up. If you owe more than the current value of your home, you will be in negative equity. If you need to move home and sell your property, and if its value has dropped below what you paid for it, there may be a shortfall between the amount you owe on your mortgage and the amount you get for the sale which you will need to repay.
Get credit ready
Before applying for a mortgage, it’s good to understand that mortgage lenders will take into account your financial history and credit rating. This helps them to know if you’re likely to be able to make your mortgage repayments.
While each lender has its own criteria, here are some things you can do now to make sure your credit profile, and therefore your mortgage application, is in the best shape possible.
8 steps to help improve your credit rating
- Register to vote
You need to be registered on the electoral roll so lenders can confirm your address and trace your credit history. If you’re not registered, the lender might not have enough information to progress your mortgage application. Contact your local authority to register or to check if you are registered.
- Be selective about your credit applications
If you make too many applications for credit, it can reflect badly on your mortgage application. The lender may think that you’re not creditworthy or that your finances are in a poor state and so, question your ability to make mortgage repayments.
- Review your credit history and score
Before starting your mortgage application, check your borrowing history using a credit reference agency. This allows you to see any inaccuracies in advance, so that mortgage lenders receive correct information on your ability to repay.
Also, check your credit score. If it’s low, see if there are any credit habits that you can improve on by following the below tips. Scoring bands can vary among different credit reference agencies.
- Calculate your debt-to-income ratio
This is the proportion of borrowing you have in relation to your money coming in. Mortgage lenders typically prefer a lower ratio, because it means you’re more likely to be able to afford your monthly mortgage repayments.
- Avoid any unnecessary borrowing
You can reduce your debt-to-income ratio by avoiding borrowing too much. Try not to take out new credit in the six months before applying for a mortgage as it could increase your debt-to-income ratio.
- But keep active credit accounts open
These show to lenders that you’re someone who’s able to consistently make repayments over a period of time. You may want to close inactive accounts as they show lenders that you have access to too much credit that you don’t need.
- Pay your bills on time
It’s always important to pay any bills on time, as any missed or late payments will be recorded on your credit history. So any recent mishaps would be visible to your prospective mortgage lender. This could make them doubt whether you’re able to repay a mortgage on time, or at all.
- Know your joint applicants’ credit profile
Mortgage lenders assess the creditworthiness of all of those named on the application. So, if you’re making a joint application, ask the other person to check their credit history and score in order. You can pass these tips onto them to help them too.
Return any requested documentation for your mortgage as soon as possible.
Work closely with your conveyancer to understand timings and next steps in the process – such as local authority search turnaround times.
Ensure all parties are working towards the same completion date and be aware of any chains you may be in which may impact this.
Consider any other third parties you’ll need to contact and obtain quotes from (e.g. removal firms), and ensure they are aware of the completion date you are aiming for.
It is a requirement of your mortgage to have buildings insurance. This covers the bricks and mortar, fixtures and fittings. It's also a good idea to take out contents insurance as well - this protects all your possessions in your home, from furniture to jewellery.
It’s also important to think about what would happen to your mortgage in the event of your death, or if you are too ill to work. Our expert Mortgage and Protection Advisers can help you to find the right level of cover to protect your mortgage, should the worst happen.
This will depend on the mortgage product, there may be a product fee to pay and early repayment charges if you repay early.
You will need to check our current rates for full details. Any product fees can usually be added on to your mortgage on completion.
There could be other charges and standard costs which you may have to pay during the course of setting up your mortgage.
You will be charged interest on any fees, charges and standard costs added to your loan.
There are other costs associated with buying a property and taking out a mortgage.
When you take out your mortgage, you arrange to have a fixed or variable rate product for a period of time.
At the end of this time, the product will end and your loan will usually be transferred to one of our lender variable rates. At this point, you may choose to move it to a new product for a further period of time.
It is sometimes possible to take a product rate with you to a new mortgage - we sometimes call this 'porting'. Your Illustration and offer letter will say if any of your product rates can be taken to a new mortgage.
We lend you the money on the basis that you are using the property as your main residence.
If your circumstances change after you take the mortgage, and you want to let the property you must ask our permission.
We do not guarantee that we will allow you to let your property and you may have to transfer onto another product if we do allow this.