First-Time Buyer and Second-Time Buyer Mortgage

Are there lenders that specialise in mixed first-time and second-time buyer applications?

Yes – some of them do allow you to access first-time buyer offers. Just contact us and we’ll guide you in the right direction, based on your circumstances.

Should we apply for a mortgage jointly or should the first-time buyer apply alone?

This depends on a variety of factors. If you don’t mind paying the extra stamp duty, for example, you can buy jointly with the second-time buyer.

As we’ve discussed in previous episodes, we also have lenders that offer Joint Borrower Sole Proprietor mortgages, where the second-time buyer wouldn’t be named on the deeds and it’s classed as a first-time buyer mortgage. We would also need to discuss other factors on that type of mortgage, because there are complications.

But if you don’t need the second-time buyer’s income for affordability, the first-time buyer could buy alone.

Should we choose between joint tenants or tenants in common? What’s the difference?

You can choose, but the most common is joint tenants, where each person has a 50% share in the property.

Alternatively, you can opt for tenants in common, which means you can pick a share – such as 70% for one person and 30% for the other.

How does the size or source of our deposit affect our application when one of us is a first-time buyer?

The source won’t have an effect just because one of you is a first-time buyer. Most lenders are okay with a gift from a blood relative, and some accept a gifted deposit from a friend.

The size of the deposit is also the same as usual. Mortgages with a smaller deposit of 5% or less are stricter on credit scoring. As long as your credit is at a good level, we should be okay. We’d look at your credit file first to give you the exact answer.

Are there alternative ways to structure the purchase to reduce costs?

Yes – there’s the Joint Borrower Sole Proprietor mortgage. Check out our episode on that. There are also various schemes for new homes, but these have pros and cons. Come and chat with us first to help you make an informed decision.

How can a mortgage broker help? Any final thoughts?

We’ve covered a lot there. When you come to us, we’ll confirm your affordability by looking at your income proof, and get you an Agreement in Principle. Then you will know what you can borrow and can start looking at property.

When you find something you like and get an offer accepted, we’ll search the market for the most suitable deal for you. Once you’re happy with everything, we submit the full mortgage application.

The lender underwrites it and sends a valuer round. If all’s good, it’ll go to a mortgage offer and the legal work begins. We will be with you all the way through to the end, when you get the keys to your new home.

Key Takeaways:

• Most lenders treat a joint application with one first-time buyer and one second-time buyer as a second-time buyer mortgage, but some may offer first-time buyer terms, allowing for more borrowing.
• First-time buyer stamp duty relief is generally lost if a second-time buyer is on the deeds; calculation is based on the second-time buyer’s status.
• Many government schemes (e.g., Shared Ownership, Right to Buy, Deposit Unlock) are available to both first-time and second-time buyers.
• Affordability is based on both incomes and all commitments, but a self-financing Buy to Let mortgage payment is often excluded from the calculation.
• The Joint Borrower Sole Proprietor mortgage can allow the second-time buyer to help with affordability without being on the deeds, potentially keeping first-time buyer benefits.
  
  

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

For specialist tax advice, please refer to an accountant or tax specialist.