Best first time buyer mortgages on offer: February 2022

There’s literally thousands of home loans available to borrowers who are trying to get on the property ladder, so which are the best first-time buyer mortgages?

The good news is that interest rates remain low, despite the increase in the Bank of England’s base rate in February from 0.25% to 0.5%. But best doesn’t always mean cheapest.

As inflation rises to 5.4%, household budgets are under pressure so you might prefer the stability of a long-term fixed rate or a low-deposit mortgage that requires less savings.

That’s why, with almost 3,000 mortgage deals open to first-time buyers according to finance experts Moneyfacts, it’s worth shopping around before choosing your first mortgage.

Aaron Strutt of mortgage broker Trinity Financial says: ‘If you only approach one or two lenders when you’re looking for a mortgage deal you could miss out on the cheapest rate, the most generous income stretches or a greater choice of medium and long-term fixed rates.’

Some banks and building societies offer first-time buyers or professionals a mortgage that is 5.5 times their annual salary to boost their buying power. Some lenders offer even more.

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.

‘The bank of mum and dad has been busier than ever but there are other guarantor options such as a joint borrower, sole proprietor arrangement to explore,’ explains Aaron. ‘Parents join first-time buyers on the mortgage but they are not added to the title deeds of the property.’

Here’s a round-up of the best first-time buyer mortgages:

Yorkshire Building Society – first-time buyer exclusive

• Rate – 2.36%
• Type – fixed rate
• Duration – two years
• Minimum deposit – 5%
• Mortgage fee – £995

The society offers a free valuation and £250 cash back when the mortgage completes. If you want to repay the loan early penalties will apply. Overpayments of your mortgage are restricted to 10% of your balance each year.

Santander – residential mortgage range

• Rate – 1.64%
• Type – fixed rate
• Duration – two years
• Minimum deposit – 10%
• Mortgage fee £999

With a 10% deposit, first-time buyers can lock into a low fixed rate for two years. The deal comes with Santander’s Homebuyer Solution package which offers a free standard valuation and £250 cash back on completion. Penalties apply if you repay within two years.

Nationwide Building Society – Helping Hand range

• Rate – 2.49%
• Type – fixed rate
• Duration – five years
• Minimum deposit – 10%
• Mortgage fee – £995

First-time buyers can borrow up to 5.5 times their salary. Ten-year fixed rate deals are available along with fee-free options. Self-employed borrowers are excluded. Free valuation and £500 cash back on completion. Mortgage term of up to 40 years allowed. Early repayment fees apply.

HSBC – sub 1% for deposit-rich buyers

• Rate – 1.24%
• Type – tracker mortgage
• Duration – two years
• Minimum deposit – 40%
• Mortgage fee £999

No early repayment charges apply. The mortgage rate is 0.74% more than the Bank of England base rate, currently 0.5% – so you pay 1.24%. If the base rate rises, so does your mortgage rate.

Metro Bank – joint borrower, sole proprietor

• Rate – 2.09%
• Type – fixed rate
• Duration – two years
• Minimum deposit – 25%
• Mortgage fee – £999

Add immediate family members to your application to boost your borrowing power. Everyone named on the mortgage is liable for the debt but the extra applicants are not named as owners of the property. Overpayments of 20% a year are allowed penalty free.

Barclays – Family Springboard

• Rate – 3.7%
• Type – fixed
• Duration – five years
• Minimum deposit – 0%
• Mortgage fee – £0

Family Springboard is a guarantor mortgage. Family or friends must deposit the equivalent of 10% of the purchase price of your property into a Barclays savings account which is locked away for five years. If you keep up to date with your payments for five years, your helpers get their savings back with interest. A 35-year mortgage term is available. Early repayment charges apply.

Image credit: Future PLC/ Robert Sanderson

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.

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