Mortgages for First Time Buyers – Guide to Buying a Property Amid Rising Interest Rates

young couple researching first time mortgages on computer

Buying your first house can be both the most exciting and daunting experience you will have in your life. With the economic outlook for mortgages and interest rates being gloomy, you may find the prospect of buying your first home off-putting.

But should you be concerned? And what options are available for first time buyers currently? The good news is that the landscape for first-time buyers is not as gloomy as it might seem and now, or in the near future, could be the perfect time to get onto the property ladder.

Is Now the Right Time to Buy Your First Home?

Over the last three years, the rules around stamp duty have changed multiple times, and currently the thresholds for Stamp Duty really benefit those buying their first home.

It doesn’t matter what income bracket you are in or the property value of the house you are looking to buy – for first time buyers the recent mini-budget changes to Stamp Duty help anyone looking to buy their first home.

The threshold for first time buyers has increased from £300,000 to £425,000, meaning even first-time buyers in London or the South-East will be able to get onto the property ladder at a much cheaper rate (in most cases, without any Stamp Duty liability at all).

Property Prices Could Drop

It is worth caveating this by saying the housing market is fast paced and dynamic, and often moves in the opposite way to expectations.

The consensus among property analysts at this time is house prices will either remain the same or drop. Some analysts have predicted drops of up to £20,000 on an average property value in the next year. Therefore, if you manage to buy a property after prices fall, you could make a significant saving compared to recent purchase prices in the market.

Mortgage Rates May Not Rise as Much as Expected

The media have covered interest rates with keen interest and some analysts have forecast the Bank of England increasing the base rate to over 7% to combat inflation.

Historically the Bank of England has been cautious about any rate rises, including at times where there was economic strain or inflation increases. Normally, the Bank of England chooses to work with the Treasury to limit money supply and squeeze inflation in this way.

We may see large increases to the Bank of England base rate. But, on the other hand, considering past policy, we might be surprised and the base rate might not increase to the levels predicted.

In any case, the Bank of England base rate isn’t at these predicted levels yet and you should carefully weigh up your personal decision against the macro-economic conditions.

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Is Help to Buy Still Available?

The Help to Buy scheme is currently only available in Wales until March 2025, so if you need to be quick if you still wish to use it. The scheme closed for applications in the UK on 31 October 2023.

In Wales, potential buyers can use buy a new home with a 5% deposit using a government equity loan of up to 20% of the property price. Applicants should check terms, seek financial advice, and get application details at

To qualify you must:

  • Buy a new-build home.
  • Buy from an approved equity loan builder.
  • Be under a certain value (which is location dependent).
  • Repay the equity loan.

The advantage of the equity loan is it has no interest applied for the first 5 years. This means if you are looking at buying a new-build property that meets the requirements above, you can borrow up to 20% of the property value with no interest for the first 5 years.

Types of Mortgages Available for First Time Buyers

Alongside government policy, lenders are also exploring ways to encourage first time buyers to take mortgages.

Of the many mortgage products available to first time buyers, the Springboard Mortgage is probably the most unique.

Many first-time buyers struggle on two fronts, deposit, and affordability. A Springboard Mortgage is designed to help first time buyers by offering a mortgage with a deposit funded by a family member.

Rather than being a gifted deposit from a family member, this money is put into a Springboard Mortgage savings account. Providing you make your mortgage payments your family member will eventually have the money returned to them and it will also accrue interest in that time.

There are now a handful of lenders that provide Springboard Mortgages or mortgages that work in a similar way.

What Our Clients Have To Say

How Can I Get a First Time Buyer Mortgage

To get a first-time buyer mortgage, your starting point should be a discussion with a whole of market mortgage broker.

A mortgage broker will look at your personal financial circumstances and advise on the best course of action specific to you.

Boon Brokers is a UK-based whole of market Mortgage, Insurance, and Equity Release broker. Boon Brokers provides fee FREE mortgage advice so contact us today to discuss your first-time buyer mortgage.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.