Mortgage Lending For First Time Buyers

Buying your first home has become increasingly difficult in recent years with increased house prices and the need to save a minimum of a 10% deposit.

However, recently there has been an increase in the amount of higher loan to value mortgage products allowing first time buyers to buy their first home with a reduced deposit of 5%.

Some mortgage lenders also offer specialist products aimed at first time buyers. The products enable first time buyers to purchase a property without the need for a deposit where a family member is able to provide 10% of the purchase price as security.

These types of mortgages require the family member to hold the security amount in a fixed term savings account with the lender for the initial fixed term of the mortgage (usually 3 years). During this time the security amount cannot be withdrawn however it will accrue interest at the rate applicable to the account. Providing the borrower keeps up with their monthly repayments the security amount and any interest will be returned to the family member at the end of the fixed term, however if the borrower misses their monthly repayments the fixed term of the savings account may be extended.

Before applying for these mortgages you should consider the following to decide whether it is right for you.


  • Easier for first time buyers to get onto the property ladder;
  • No need to save for a deposit; and
  • Family members will get their security back at the end of the initial fixed term.


  • The family member will need to seek independent legal advice which will incur additional fees;
  • Only a limited number of lenders are currently providing these mortgages; and
  • The interest rate for the initial fixed term of the mortgage will be higher than other products.
  • Risk associated with the borrower not keeping up with their repayments

Mortgages of this type will not be suitable for everyone and it is important to choose an option thatís right for you, your financial situation and plans for the future. Your Bank, Building Society or mortgage broker will be able to help you with your decision and application.

We have expertise and experience in dealing transactions involving Help to Buy equity mortgages and the Help to Buy ISA scheme. We also deal with shared ownership purchases.

We are not regulated by the Financial Conduct Authority and any advice on particular mortgage products would not be given by Fosters.

We offer discounted rates for First Time Buyers and provide conveyancing services across all of our offices. For more information on how we can help please contact our experienced, professional and friendly team on 01603 620508 or .