First Time buyers

Traditionally, mortgage lenders have been keen to attract first-time buyers through offering discounted interest rates to encourage people to get themselves on the housing ladder. Before the recession, first-time buyers could get a mortgage with just a 5% deposit and in some cases, they could take out a mortgage with no deposit whatsoever.

However, following the economic meltdown, lenders have become far more reluctant to lend to borrowers who have only a small deposit and lending criteria became much stricter. The once common 90% and 100% mortgages disappeared from the market, and first-time buyers were required to stump up a deposit of at least 25%.

Fortunately, the outlook is now improving for first-time buyers, with 90%, 95% and 100% mortgages being relaunched, while other lenders are offering schemes to help buyers take their first step onto the property ladder.

Of course, the smaller the deposit, the higher the interest rate you're likely to pay on your mortgage. So it's always worth saving up as much as possible before applying for a mortgage deal.