The best mortgage rates for first-time buyers

If you’re hoping to buy your first home soon, searching for the best mortgage rates for first-time buyers is an essential part of the process.

Data from Zoopla revealed the property market saw the busiest May in four years, amid an increased number of properties for sale and relaxed affordability stress tests, allowing many first-time buyers to borrow more.

This is despite April's Stamp Duty hike, which means first-time buyers now pay more tax when purchasing a property after they saw their exemption trimmed back.

Getting the best possible mortgage deal is important because it can make a big difference to your monthly repayments - and the interest you pay overall.

Mortgage rates for the rest of 2025 are widely expected to trend downwards but no big falls are expected, so first-time buyers should compare mortgage deals to secure one that’s right for them, as soon as they decide to buy.

> Compare mortgage deals and get a free mortgage in principle with L&C*

The deals below are the best rates aimed at first-time buyers. The best rates for home movers or those remortgaging may be different.

The rates and repayments below are based on a purchase of £226,000 and a term of 25 years.

Mortgage rates change often, so it's a good idea to find the deal that could be best for you by comparing rates and getting a mortgage in principle*, with our broker partner L&C.

Best mortgage rates for first-time buyers with a 5% deposit

• Two-year fix: HSBC has a two-year fixed rate at 5.05 per cent with a £0 product fee and £500 cashback. Monthly repayments are £1,260.
• Five-year fix: HSBC has a five-year fixed rate at 4.89 per cent with a £0 product fee and £500 cashback. Monthly repayments are £1,240.

Best mortgage rates for first-time buyers with a 10% deposit

• Two-year fix: Furness has a two-year fixed rate at 4.45 per cent with a £999 product fee and £250 cashback. Monthly repayments are £1,130.
• Five-year fix: Leek has a five-year fixed rate at 4.38 per cent with a £995 product fee. Monthly repayments are £1,122.

Best mortgage rates for first-time buyers with a 15% deposit

• Two-year fix: Furness has a two-year fixed rate at 4.17 per cent with a £999 product fee and £250 cashback. Monthly repayments are £1,037.
• Five-year fix: HSBC has a five-year fixed rate at 4.32 per cent with a £999 product fee. Monthly repayments are £1,048.

Best mortgage rates for first-time buyers with a 25% deposit

• Two-year fix: Barclays has a two-year fixed rate at 4.28 per cent with a £0 product fee. Monthly repayments are £922.
• Five-year fix: HSBC has a five-year fixed rate at 4.28 per cent with a £0 product fee. Monthly repayments are £920.

Best mortgage rates for first-time buyers with a 40% deposit

• Two-year fix: Mpowered has a two-year fixed rate at 4.19 per cent with a £0 product fee. Monthly repayments are £730.
• Five-year fix: Barclays has a five-year fixed rate at 3.99 per cent with a £999 product fee. Monthly repayments are £715.

> Guide: How to get a mortgage as a first-time buyer

The mortgage deal you can get as a first-time buyer depends on the size of your deposit, as well as your personal circumstances, your income, outgoings, any other outstanding debts and credit score.

Having a bigger deposit relative to the purchase price opens up cheaper mortgage rates, as lenders see you as a less risky borrower.

Mortgage rates are offered based on the size of the mortgage versus the property's value. This is known as the loan-to-value (LTV) and is the reverse percentage of your deposit amount. For example:

• if you had a 10 per cent deposit, your mortgage would be 90 per cent LTV
• if you had a 25 per cent deposit, it would be 75 per cent LTV
• if you had a 40 per cent deposit, it would be 60 per cent LTV

> Compare mortgage rates at different loan-to-values with L&C*

Although they assess on individual affordability, mortgage lenders typically limit most people to borrowing roughly no more than 4.5 times their annual income. However, this can be lower if you have any other loans or debts – or higher if your income is stable, you have an excellent credit history and little existing debt.

Speaking to a whole-of-market mortgage broker, rather than going direct to a bank or building society, is the easiest way of getting matched to the cheapest possible mortgage deal.

Mortgage brokers will also run an affordability check to see what the maximum amount you can borrow is, looking at information from bank statements, payslips or tax returns.

David Hollingworth, mortgage expert and broker at L&C Mortgages, told us there have been positive developments recently that could benefit first-time buyers.

‘The biggest issues are affordability and being able to save a big enough deposit. Lenders have reacted quickly to the FCA’s reminder that they have some flexibility in how they stress test affordability. That has seen many improve the stress rates which should allow more borrowers to achieve a bigger mortgage.’

Some mortgage providers have introduced first-time buyer help schemes that boost how much first-time buyers can potentially borrow.

Nationwide’s ‘Helping Hand’ mortgage gives employed first-time buyers the ability to borrow up to six times income – those with a smaller deposit of five per cent are even eligible.

This means couples earning £50,000 can borrow £300,000 for their first home, which is roughly £75,000 more than standard lending.

Halifax’s ‘First Time Buyer Boost’ mortgage works in a similar way, allowing first-time buyers to borrow up to 5.5 times their annual income.

To be eligible, first-time buyers need to be employed and earning a total household income of £50,000 or more. They also need to have a deposit of at least 10 per cent to put towards the purchase of the property.

Certain lenders provide higher multiples for particular professions, usually secure public sector jobs such as nurses or civil servants.

Some providers are even offering mortgage deals that don’t require a deposit, although buyers need to have good affordability and should be prepared to fix for longer.

George Smith, Mortgage Adviser at LDN Finance, told us that despite the availability of these 100 per cent mortgages, many first-time buyers struggle to meet the criteria to qualify for them.

'In practice, these schemes often require a joint income to meet lenders' stress tests, making it difficult for single buyers to take advantage of them. As such, the concept of a sole applicant successfully securing one of these loans is more theoretical than realistic in today’s climate.

'Moreover, with house prices remaining stubbornly high and showing little sign of downward movement, the gap between earnings and property values continues to grow.'

Choosing how long to fix your mortgage rate for depends on what you think will happen to interest rates over the fixed period and your personal circumstances.

A longer fix offers security and can save on fees from repeatedly remortgaging. Often people can avoid five-year fixes because they think they will move but most homeowners stay longer than two or three years in a property. Ask yourself, will you really need to move again after just a few years?

Most people fix for either two years or five years, although there are some who will fix for three years or even 10 years.

People often fix for two years because they believe that interest rates will continue falling, so a shorter fix allows them to eventually switch to a cheaper rate.

Shorter fixes can also suit people who think they’ll want to move again soon – fixing for longer might open them up to an early repayment charge on the mortgage were they to exit early.

But there’s no easy answer, so you have to think about what’s best for your situation.

George Smith, Mortgage Adviser at LDN Finance, says that the length of the fix is completely dependent on the homebuyer’s situation and outlook.

‘However, the majority of borrowers are currently opting for shorter-term fixed rates, with a view to reviewing things in two to three years’ time.’

Remember though, there is no guarantee rates will me materially lower in two or three years' time - and they could be higher.

A tracker mortgage essentially tracks the Bank of England's base rate plus or minus a fixed percentage. For example:

• The mortgage could track base rate, currently at 4.25 per cent, while adding 0.5 percentage points, making the rate 4.75 per cent.
• If the Bank of England were to then cut base rate from 4.25 per cent to 3.75 per cent, the tracker rate will immediately fall to 4.25 per cent.

A tracker mortgage without an early repayment charge could put borrowers in a position to take advantage when rates drop, but not all trackers come without fees for jumping ship.

Meanwhile, despite the potential benefits, a tracker can leave people vulnerable to further base rate hikes while also being more expensive at the start than fixed rates at present.

Broker George Smith says that people ask him about trackers regularly, but he then questions: ‘If the base rate were to rise for any reason, would you have sufficient assets or savings to comfortably absorb an increase in your monthly mortgage payment – on top of all the other rising living costs?

‘More often than not, for first-time buyers or those early in their ownership journey, the ability to budget and have certainty over their biggest monthly outgoing is really appealing in the current climate.’

1. Build a deposit

Your deposit usually needs to be at least five per cent of the value of a property, but many mortgage lenders ask that first-time buyers have at least 10 per cent.

The higher your deposit the better. Not only will you have less debt to repay, but those who put down larger deposits as a percentage of the property's value will usually get better interest rates.

Still, you should avoid throwing everything at the deposit – it’s wise to keep an emergency savings fund and you’ll need money for other costs associated with home buying.

To build a deposit quicker, work out your budget to find out how much you can afford to save regularly then contribute monthly to a savings account that pays a high interest rate.

What is a Lifetime Isa?

A Lifetime Isa can help you save for a deposit quicker because the Government gives you a 25 per cent bonus on your contributions. So if you save the maximum of £4,000 in your Lifetime Isa each year, the Government will top this up by £1,000. But be careful though, because Lifetime Isas can only be used to buy homes of up to £450,000.

How much is the average deposit for first-time buyers?

According to figures from UK Finance, the average deposit paid by first-time buyers in 2024 who didn’t receive help from family was £60,741. On the other hand, the average deposit paid by those who did have assistance from family was £118,073.

2. Check your credit history

Checking your credit history as soon as possible gives you enough time to iron out problems and improve your credit file if necessary.

Issues such as a history of late payments or a lack of data about your financial obligations – known as a thin credit file – aren’t quick to fix.

Checking your credit file at least 12 months before you want to apply for a mortgage gives you the best chance of getting your credit history into shape.

How to check your credit history

Checking your credit score is your first port of call because it’s based on the data in your credit file and represents the health of your credit history.

You don’t have one credit score. Each credit reference agency calculates your score differently and mortgage providers have their own systems for working out your creditworthiness too.

But the scores you get from the credit reference agencies are a useful indicator of how a mortgage lender will view your application. You can get a free credit score at:

• Experian
• ClearScore (not a credit reference agency – uses Equifax data)
• Credit Karma (not a credit reference agency – uses TransUnion data)
• TotallyMoney (not a credit reference agency – uses TransUnion data)

These services usually let you view your full credit report too.

A good score indicates that the mortgage lender is more likely to see you as creditworthy while a poorer score suggests it will view you as riskier to lend to. A poor score warrants further investigation into where to improve.

You can view your credit score and credit history as many times as you like without damaging them, because accessing your own data is recorded as a ‘soft’ search and isn’t visible to lenders when they look at your file.

3. Boost your credit score if necessary

You don’t need a set credit score to get a mortgage as a first-time buyer. Even if you have an excellent score, there’s no guarantee a mortgage lender will accept your application.

But a good credit score indicates it’s more likely you’ll be able to borrow the amount you need at the cheapest interest rates. This makes it worth improving if it’s not where you want it to be.

You can improve your credit score by taking steps such as registering to vote, if you haven’t already, and reducing your credit utilisation. This is how much of your available credit you’re using across all your credit cards.

As a basic example, if you have one credit card with a £6,000 credit limit and a £3,000 balance, your credit utilisation will be 50 per cent. It’s generally recommended to keep your credit utilisation below 25 per cent.

Work out your credit utilisation ratio by adding up your credit card balances, dividing this by your total available credit limit, and multiplying that figure by 100 to get a percentage.

> A scam wrecked my credit score: Can I put our mortgage in my wife's name?

4. Get your bank statements on track

Lenders ask for three months’ of bank statements to check things like:

• the consistency of your income
• your affordability
• your regular outgoings
• your regular balance (for example, whether you’re hitting your overdraft limit often)

A healthy bank statement will show you have a steady income each month, recurring monthly bills that are paid on time, and purchases that still leave you with reasonable cash reserves. This shows you’ll be able to afford mortgage payments without any problem.

On the other hand, using an overdraft regularly can imply to lenders that you find it difficult to manage your money. Spending significant amounts on things lenders deem risky, such as gambling, can cause similar concerns.

Returned direct debits, which occur when you don't have sufficient funds in your account, can also suggest that you find it difficult to make payments on time.

5. Speak to a mortgage broker

It’s possible to approach mortgage providers directly, but first-time buyers may find it useful to have a mortgage broker guide them through the application process.

A good mortgage broker can scour deals from lots of lenders and discuss which one is best for you. They may also have access to special rates that banks don't offer to everyone.

Some brokers charge customers a fee for their services. But you can also find brokers that take a commission from the mortgage lender instead and don't charge homebuyers anything.

When looking for a mortgage broker, check they’re whole of market. This means they look at all of the mortgages available across many lenders, instead of being paid fees by a select few to only offer buyers their deals.

Mortgage brokers are also called mortgage advisers – the terms are usually used interchangeably.