Following months of financial struggles things are beginning to look up for the mortgage market. With the number of first-time buyers reaching a five-year high earlier this year it seems many are now finally able to get on to the property ladder.

But things are still very different from the boom of years past. Here are the key things that those looking for first-time buyer mortgages must consider.

Be prepared

Lenders are still able to pick and choose who they issue mortgages to so it pays to be prepared. Start early to give yourself the best possible chance of finding a competitive deal.

You should ensure you are on the electoral roll at your current address and assess your credit history. If this leaves a lot to be desired there are steps you can take to improve your score. And those with no credit history can find it as difficult to get a property loan as those with a poor record, so if you’ve never had credit before taking out a credit card and use it wisely, paying it off in full each month could help improve your credit rating.

Address and employment history are also important, so ensure you can provide things such as pay slips and bank statements from the past three years.

Repayment options

There are two repayment options:

Capital and interest, also known as repayment mortgages

These work as standard loans where your monthly payments include the interest and also a part of the capital balance. As the loan amount slowly falls, so does the interest.


No capital repayments are made and monthly payments only cover the interest. This means borrowers must have a separate repayment vehicle in place so that the capital can be paid off at the end of the term.

Rate choices

There are different interest rate options available, the three most common are:


This fixes the interest rate for a set period of time, usually two, three or five years. Fixed mortgages are a good option for first-time buyers as they guarantee that your repayments stay the same each month.


Tracker mortgages follow the Bank of England base rate. So if it is set at 2% above the base rate, that would be 2.5% in today’s climate as the base rate is 0.5%. But if the base rate rises to 1%, the rate on your mortgage would be 3%.


Variable rates work in a similar way but the rate will be changed at periods set by the lender and according to their cost of lending.



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