First time buyers schemes

1. First time buyer mortgages

Many lenders offer special mortgages for first time buyers. These loans usually have higher loan-to-values. This means you may only need a deposit of 5% or 10% of the property’s value.

First time buyer mortgages often come with additional offers as well. They might be fee free or offer a free valuation and free legal fees.

The Co-operative Bank provides mortgages for first time buyers with only a five per cent deposit. And there's a range of products for those who have 10% or more to put down.

Use our mortgage calculator

2. Family mortgages

Your family might be able to help you buy a home. They could help you with the mortgage deposit, or they could act as a ‘guarantor’ for the mortgage.

Guarantor mortgages allow a parent or close family member to stand as guarantor on the mortgage. This means they are putting their name to the mortgage and may be liable for any shortfall if your property gets repossessed and then sold.

They might do this by offering their savings as security against the mortgage or agreeing to cover any missed mortgage payments.

Some lenders also offer family springboard mortgages. These are home loans where a family member can help out financially by using their own home or savings as security. Like other guarantor mortgages, this means the family member is liable to pay what is owed if the borrower can’t cover the costs.

3. Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme aims to increase the number of 95% mortgages available to buyers with a 5% deposit.

The government backed scheme encourages lenders to offer these mortgages by protecting them from potential losses. For buyers, it works in the same way as any other mortgage but with a few more restrictions, such as:

• mortgages under the scheme are only available on primary residences. This means they can’t be used on a buy-to-let property or second home
• the maximum value of the property is £600,000
• you should have a deposit of between 5% and 9% of the property's value and you need to borrow 91% to 95% as a repayment mortgage.

You still have to show the lender you can afford the mortgage repayments, as with any other mortgage deal.

The Co-operative Bank isn’t using the Mortgage Guarantee Scheme.

4. Help to Buy Equity Loan (Wales only)

The Help to Buy Equity Loan is a shared equity scheme open to first time buyers purchasing a newly built house. It was previously available in both England and Wales, but is now only available in Wales.

It aims to help those with a low deposit get onto the property ladder by offering them a government loan.

You need at least a 5% deposit, and the government will offer you an interest-free equity loan for five years on up to 20% of the property’s value.

The rest is borrowed as a mortgage which works in the same way as any other mortgage.

It’s worth noting that property price caps apply, depending on the region you’re buying in. For Wales, the cap is £300,000.

After five years, you usually need to start repaying the equity loan and the government will start to charge monthly interest on it at 1.75%. However, make sure you read the terms and conditions carefully so you’re aware of any other contractual requirements.

You can find out more about Help to Buy mortgages on the Money Helper's website

5. Shared Ownership

Shared ownership schemes allow you to buy a portion of a property from a housing association or registered provider. Under the Right to Shared Ownership scheme, this is usually between 10% and 75% of the overall property value.

You take out a mortgage in the normal way on the portion you own, then pay a reduced rent to the housing association on the portion they own.

Usually, once you’ve owned the home for a certain period of time, you can buy further shares in the property from the housing association. This process is called ‘staircasing’, and over time, you can end up owning the whole property.

Learn more about shared ownership mortgages on the Money Helper's website

6. Shared Equity

A market shared equity mortgage helps you buy a home by letting you borrow part of the cost instead of all of it. You take out a normal mortgage for one part of the property, and another organisation pays the rest as an equity loan.

You usually don’t make monthly payments on the equity loan at first. When you sell the property or repay the loan, the provider gets back the same percentage of the property’s value that they put in. This means they share in any increase or decrease in the property’s value.

This can make buying your first home more affordable by reducing how much you need to borrow upfront.

How we can help

If you're looking for more information and advice on the best way to buy your first home, you can find out more about our mortgage products.

If you can't pay your mortgage

If you're worried that you won’t be able to pay your mortgage, get in touch with your lender. They will work with you to come up with a repayment plan based on your circumstances.

Find out more

Download our First Time Buyers guide (PDF) for more information on buying a house.

You can also Find out more about our mortgage products.