A first-time buyer mortgage works like any other repayment mortgage: you put down a deposit, a lender lends you the rest against the value of the home, and you repay it (plus interest) over an agreed term. What makes it a “first-time buyer” deal is that many lenders reserve their most accessible products, lowest deposit options and buyer schemes for people who have never owned a property. The single most useful first step is a Mortgage Agreement in Principle, because most estate agents around Sleaford, Lincoln and Grantham will not take your offer seriously without one. Below we answer the questions we hear most often at our office on Carre Street.
What deposit do I need as a first-time buyer?
The realistic minimum is 5% of the purchase price. On a £180,000 first home (not unusual around Sleaford or North Hykeham) that is £9,000; on £200,000 it is £10,000. A bigger deposit almost always unlocks a better rate, because the loan-to-value falls: 10% (a 90% mortgage) and especially 15% or 20% open up noticeably cheaper deals. Lenders prefer a deposit built from your own savings, but a non-repayable gift from a close family member is widely accepted, usually with a short letter confirming it is a gift and not a loan. You can estimate the numbers with our deposit calculator.
How much can I borrow?
Most lenders cap borrowing at around four to four-and-a-half times your annual income, though some stretch further for certain professions or higher earners. Affordability is the real test: a lender looks at your income (basic pay plus sustainable overtime, bonus or commission), your regular outgoings, existing credit commitments and how a rise in interest rates would affect you. As a rough guide, a couple earning £55,000 between them might borrow in the region of £240,000 to £250,000, but that figure moves a lot depending on car finance, credit cards and childcare. Our affordability calculator gives you a starting estimate before we confirm the exact position with lenders.
Which type of interest rate should I choose?
There are four common structures, and the right one depends on how much certainty you want. For reference, and illustrative only as of July 2026, the Bank of England base rate is 3.75%, the average standard variable rate sits at roughly 7.13%, and competitive fixed rates start from around 4.3% for buyers with a larger deposit (higher-LTV 95% deals average closer to 6%).
| Rate type | How it works | Best suited to |
|---|---|---|
| Fixed | Payments stay the same for a set period, typically 2, 3 or 5 years | Anyone who wants certainty and a fixed monthly budget |
| Tracker | Follows the Bank of England base rate, so payments rise and fall | Those comfortable with some risk who expect rates to fall |
| Discounted | Sits a set margin below the lender’s SVR for a period, then reverts | Buyers wanting a lower early rate with some flexibility |
| Standard variable | The lender’s default rate; can change at any time | Rarely a first choice; usually a rate to move off, not onto |
Most first-time buyers we help choose a fixed rate for the peace of mind of a payment that will not change while they settle in. As an illustration only, a £180,000 repayment mortgage over 30 years at 4.5% works out at roughly £912 a month.
What is an Agreement in Principle and why do I need one?
An Agreement in Principle (sometimes called a Decision in Principle) is a lender’s written indication of how much it would be willing to lend you, based on a soft credit check and the figures you provide. It is not a formal mortgage offer, but it shows estate agents and sellers that you are a serious, funded buyer. In a competitive local market that can be the difference between your offer being accepted or overlooked. It usually takes us a short appointment to arrange one, and it does not commit you to that lender.
Can I buy with a 5% deposit or no deposit at all?
Yes to 5%, with caution on “no deposit”. A range of 95% mortgages remain available in 2026, helped by the mortgage guarantee scheme, and major lenders continue to offer them, although the choice of 95% products is tighter and the rates are higher than lower loan-to-value deals. Genuine zero-deposit options are rare and tend to rely on a family member’s savings or property as security, so they suit a minority of buyers. If your deposit is small, the sensible move is to compare the true monthly cost across deposit levels rather than assume the smallest deposit is best. See our low-deposit mortgage advice for how this works in practice.
How does a Lifetime ISA boost my deposit?
A Lifetime ISA (LISA) is one of the most effective savings tools for first-time buyers. If you are aged 18 to 39 you can open one and pay in up to £4,000 each tax year, and the government adds a 25% bonus, so £4,000 becomes £5,000. You can use the money and bonus towards a first home costing £450,000 or less, provided you buy with a mortgage and the account has been open for at least 12 months. Be aware of the trade-off: if you withdraw for any other reason before age 60 you pay a 25% government charge, which claws back the bonus and a little of your own money too. Help to Buy ISAs can no longer be opened, so the LISA is the current route.
How does Shared Ownership work?
Shared Ownership lets you buy a share of a property and pay a subsidised rent on the rest to a housing association. Under the current model for homes funded through the 2021 to 2026 Affordable Homes Programme, you can start with a share as low as 10% (older schemes started at 25%), and you only need a 5% deposit on the share you buy rather than the whole property. Rent on the remaining share is usually capped at around 2.75% a year of the part you do not own. Over time you can “staircase”, buying further shares, and newer leases even allow 1% steps each year for the first 15 years. It suits buyers who cannot yet afford a full purchase, but do factor in rent plus any service charge. Our Shared Ownership guidance and calculator explain the sums.
Do first-time buyers pay stamp duty?
In England, first-time buyer relief means you pay no Stamp Duty Land Tax on the first £300,000, as long as the property costs £500,000 or less. Between £300,001 and £500,000 you pay 5% on the slice above £300,000. Above £500,000 the relief disappears entirely and standard rates apply to the whole price, so £500,000 is a genuine cliff edge. The maximum saving from the relief is £5,000. These thresholds have applied since 1 April 2025 and remain in place in 2026. Reassuringly, most first homes around Sleaford, Grantham and Lincoln sit comfortably below the £300,000 mark, so many local first-time buyers pay no stamp duty at all. Check your figure with our stamp duty calculator. Scotland and Wales run their own systems.
What if I have bad credit?
A past blip does not automatically rule you out. Start by checking your credit file for errors, pay every bill on time, register to vote at your current address and keep the balances on any cards well below their limits. Some lenders take a more understanding view of missed payments, defaults or historic difficulties than others, which is exactly where whole-of-market advice earns its keep. The team can look at your file early and steer you towards lenders likely to say yes, rather than you collecting declined applications that leave marks on your record.
What does the buying process look like step by step?
- Meet your adviser to work out your budget and total costs
- Obtain a Mortgage Agreement in Principle
- Find your home and make an offer
- Apply for the mortgage and arrange any survey or valuation
- Appoint a solicitor or conveyancer for the legal work
- Receive your formal mortgage offer once fully approved
- Exchange contracts and pay your deposit
- Complete, and collect the keys to your first home
What will it all cost beyond the deposit?
Budget for more than the deposit. Typical extra costs include a lender arrangement or product fee (often £0 to around £1,000, sometimes addable to the loan), a valuation or survey (a basic homebuyer survey is commonly a few hundred pounds), solicitor or conveyancer fees plus search costs, and any stamp duty if it applies. Extending the mortgage term (5 to 40 years) lowers the monthly payment but increases the total interest you pay, so we usually recommend the shortest term you can comfortably afford and check whether overpayments are allowed. We set out our own charges openly on our fees page.
Common questions
How long does the whole process take?
From accepted offer to completion is commonly six to twelve weeks, though it varies with the chain, the survey and how quickly the legal work moves. Having your Agreement in Principle and documents ready in advance is the best way to keep things moving.
Can two friends or family members buy together?
Yes. Joint applications are common, and some lenders allow up to four people on one mortgage. Combining incomes can raise how much you borrow, but everyone named is jointly responsible for the repayments, so it is worth taking advice on ownership and protection first.
Do I need life insurance to get a mortgage?
It is not usually a legal requirement, but most buyers arrange life insurance so the mortgage would be repaid if the worst happened. Buildings insurance, on the other hand, is normally a condition of the loan.
Ready to start? Talk to a former bank manager in Sleaford
As a family-run team of former bank managers on Carre Street, we give whole-of-market first-time buyer advice across Sleaford, Lincoln, Grantham, North Hykeham and the surrounding villages. Run your numbers with our repayment calculator, read more about our first-time buyer mortgages, then book a free, no-obligation chat. We will explain your options in plain English and help you buy with confidence.
Your home may be repossessed if you do not keep up repayments on your mortgage.
