Finding the righ tmortgage as a first time buyer is not just about finding the lowest interest rate. It is about finding the right type of deal, for your deposit size, at the right time — and making sure the terms work for your life over the next few years.
Mortgage rates have been moving in 2026. The Bank of England base rate currently sits at 3.75%, and while rates fell toward the end of 2025, global events in early 2026 have caused some lenders to reprice deals upward. That makes the guidance in this article more important than ever — because the right decision today can save you thousands over your mortgage term.
What Makes a Good Mortgage Deal for First Time Buyers?
A good mortgage deal is not just the one with the lowest headline rate. There are several things that together make a deal genuinely good or not so good for a first time buyer:
• Initial interest rate: This is the rate you pay during the initial period (usually 2, 5, or 10 years). A lower initial rate means lower monthly payments during that time.
• Arrangement fees: Many deals charge a product or arrangement fee of between £999 and £2,000. Sometimes a deal with a slightly higher rate but no fee works out cheaper overall — especially on smaller mortgages.
• Early repayment charges: If you leave the mortgage before the fixed period ends, you will usually pay an early repayment charge. Knowing the ERC schedule matters if you think your circumstances might change.
• Overpayment flexibility: Most lenders allow you to overpay up to 10% of your outstanding balance per year without a penalty. If you expect to receive bonuses or lump sums, this matters.
• Portability: If you move home during the fixed period, portability lets you take your mortgage with you. Not all mortgages are portable, and not all lenders approve porting easily.
• Incentives: Some lenders offer cashback incentives or free valuations that reduce your upfront costs. These can genuinely tip the balance between two otherwise similar deals.
Types of Mortgages Available to First Time Buyers
Fixed-Rate Mortgages — 2-Year vs 5-Year vs 10-Year
A fixed-rate mortgage locks in your interest rate for a set number of years — typically 2, 5, or 10. During that period, your monthly payments stay exactly the same regardless of what happens to interest rates in the wider market. When the fixed period ends, you move onto your lender’s standard variable rate (SVR) unless you remortgage to a new deal.
The 2-year fixed rate gives you the most flexibility. Rates tend to be lower in the short term, and you can remortgage to a new deal sooner if rates drop. The downside is that you go through the remortgage process more often and face more uncertainty about what your payments will look like in two years.
The 5-year fixed rate is the most popular choice for first time buyers right now. It gives you payment certainty for five years — long enough to settle into homeownership without worrying about rate changes. The rate is usually slightly higher than a 2-year fix, but the peace of mind is worth it for most buyers.
A 10-year fixed rate locks in your payments for a decade. This can be a good option if you plan to stay in the property for a long time and want maximum certainty. However, you are locked in for longer, which means early repayment charges apply for a full decade if your circumstances change.
As of late April 2026, the best 2-year fixed rate for home purchases is around 4.64%, and the best 5-year fixed rate is around 4.73%, based on data from leading UK brokers and comparison sites.
Tracker Mortgages — Following the Bank of England Base Rate
A tracker mortgage has an interest rate that moves up and down with the Bank of England base rate. If the base rate drops, your payments go down. If it rises, your payments go up. Most tracker mortgages are set at a margin above the base rate — for example, base rate plus 1%.
The Bank of England base rate is currently 3.75%. Trackers can be a good option if you expect rates to fall and want to benefit automatically without having to remortgage. However, if rates rise, your payments rise with them — so there is an element of risk compared to a fixed deal.
Most tracker mortgages do not have early repayment charges, which gives you more flexibility to leave and switch if a better deal comes along.
Variable Rate Mortgages — Flexibility with Risk
Standard variable rate (SVR) mortgages are set by the lender and can change at any time. SVRs are generally higher than fixed or tracker rates. Most buyers end up on an SVR when their fixed or tracker period ends — and the advice is almost always to remortgage before that happens.
The average SVR from major UK lenders is currently around 6.87%. That is well above the rates available on new fixed deals, which is why it pays to act before your existing deal ends.
Interest-Only vs Repayment Mortgages
A repayment mortgage is the standard choice for most first time buyers. Each month you pay off both the interest and a portion of the original loan, so over time your outstanding balance reduces and you eventually own the property outright.
An interest-only mortgage means you only pay the interest each month. Your outstanding balance does not reduce. At the end of the mortgage term, you still owe the full original loan and need to repay it — usually by selling the property. Interest-only mortgages are rarely available to first time buyers through residential lenders and are mainly used in buy-to-let lending.
At BM14 Finance, we walk you through every mortgage type and help you decide what works best for your goals. Our advisors have helped thousands of buyers find the right deal — not just the right rate. We also offer protection services, including traditional life insurance, income protection, critical illness cover, over 50s cover, whole of life insurance, and buildings and contents insurance. Contact BM14 Finance today and get the guidance you deserve.
Best First Time Buyer Mortgage Rates Right Now
Best Deals with a 5% Deposit (95% LTV)
If you only have a 5% deposit, you are looking at 95% LTV mortgages. These are more expensive than lower LTV deals because the lender is taking on more risk. That said, the Freedom to Buy scheme has encouraged more lenders to offer these products, so there is genuine competition in the market.
For a £350,000 purchase price with a 5% deposit over 25 years, 2-year fixed rates at 95% LTV are currently around 5.3% to 5.9%, depending on the lender and any arrangement fees. Always factor in the fee when comparing deals — a fee-free mortgage at a slightly higher rate can sometimes be cheaper overall.
Best Deals with a 10% Deposit (90% LTV)
With a 10% deposit, you move to 90% LTV and rates improve noticeably. The best 2-year fixed rates at 90% LTV from lenders like NatWest and RBS are currently around 5.09% with a £995 product fee. This is a meaningful step down from 95% LTV rates, which is why saving a little longer to reach 10% can be a smart move.
Best Deals with a 25% Deposit (75% LTV)
At 75% LTV, you are in a much stronger position. Rates at this level are competitive, and you have a wide range of lenders to choose from. Based on current market data, 5-year fixed rates at 75% LTV are available from around 4.73% with leading lenders such as Nationwide.
Best Deals with a 40% Deposit (60% LTV)
A 40% deposit puts you in the best bracket for rates. Lenders see borrowers at 60% LTV as very low risk, and the rates reflect that. These deals are mainly relevant to buyers in lower-priced areas who have built up significant savings, or buyers who have inherited money. The rates available here are the lowest in the market, often sub-4% on some products depending on market conditions.
How Does Your Deposit Size Affect Your Mortgage Rate?
Your deposit directly determines your loan-to-value ratio (LTV) — and LTV is one of the most important factors in the rate a lender will offer you. The lower your LTV, the less risk the lender takes, and the better rate they are willing to give you.
| Deposit Size | LTV | Rate Tier | General Rate Range (2026) |
| 5% | 95% LTV | Highest rates | ~5.3% – 5.9% (2-year fix) |
| 10% | 90% LTV | Improved rates | ~5.0% – 5.4% (2-year fix) |
| 15% | 85% LTV | Moderate rates | ~4.8% – 5.1% (2-year fix) |
| 25% | 75% LTV | Good rates | ~4.6% – 4.9% (2-year fix) |
| 40% | 60% LTV | Best rates | Sub 4.5% possible on some deals |
The difference between a 5% deposit mortgage and a 25% deposit mortgage can be hundreds of pounds per month. Over a 25-year term, that difference is enormous. If you can hold off and save a little more, it is almost always worth doing.
What is Loan-to-Value (LTV) and Why Does it Matter?
Loan-to-value is simply the size of your mortgage expressed as a percentage of the property’s value. If you buy a £200,000 home with a £20,000 deposit, your mortgage is £180,000 — that is 90% of the property’s value, so your LTV is 90%.
LTV matters because it tells the lender how much of the property’s value they are lending against. A high LTV means they are lending a lot relative to what the property is worth. If you default and they have to sell the property, there is less of a buffer between what they lent and what they can recover. Hence, they charge more for the risk.
As you pay down your mortgage over time, your LTV decreases and your equity grows. When you remortgage — usually after two or five years — you may find you have moved into a lower LTV band and can access better rates than when you first bought.
How to Get the Best Mortgage Deal as a First Time Buyer?
Improve Your Credit Score Before Applying
Your credit score is one of the first things a mortgage lender looks at. A strong credit history shows that you pay your bills on time and manage credit responsibly. Before you apply for a mortgage, check your credit report with all three main agencies — Experian, Equifax, and TransUnion. Make sure there are no errors, pay off outstanding balances where you can, and avoid applying for new credit in the months leading up to your mortgage application.
Even small improvements to your credit score can move you into a better risk category with lenders and open up more competitive deals.
Save a Bigger Deposit If Possible
We have already covered how deposit size affects your rate, but it is worth repeating: even moving from a 5% deposit to a 10% deposit can significantly reduce your monthly payments and the total interest you pay over the life of the mortgage. If you can extend your saving period by a few months to reach the next LTV threshold, it is usually worth doing.
Use a Mortgage Broker vs Going Direct to a Lender
Going straight to your bank is the most common mistake first time buyers make. Your bank only offers its own products. A whole-of-market mortgage broker has access to deals from 90 or more lenders — including exclusive rates that are not available directly to customers.
A good broker will also help you understand which lenders are most likely to approve your application based on your income, deposit, and credit history. This matters because multiple unsuccessful mortgage applications can damage your credit score.
Get a Mortgage in Principle First
A mortgage in principle (MIP) — also called an agreement in principle (AIP) — is a document from a lender stating how much they are prepared to lend you, based on a soft credit check. It does not affect your credit score and it gives you a clear budget when you start viewing properties.
Government Schemes That Can Help You Access Better Deals
Freedom to Buy / Mortgage Guarantee Scheme
As covered earlier, the Freedom to Buy scheme encourages lenders to offer 95% LTV mortgages. Without it, many buyers with a 5% deposit would find very few mortgage options available. The scheme does not change the rate you pay, but it does expand your options — which creates more competition and can indirectly lead to better deals.
Shared Ownership Mortgages
With Shared Ownership, you only take out a mortgage on your share of the property. So if you buy a 50% share of a £200,000 home, your mortgage is on £100,000. This means a smaller loan and lower monthly payments — even if the interest rate is similar to a standard residential mortgage. It is a practical way to get onto the ladder in areas where full ownership would require a much larger deposit.
Own New Rate Reducer Scheme
The Own New Rate Reducer is a scheme offered by some new-build developers in partnership with lenders. It uses part of the developer’s subsidy to buy down your mortgage rate for an initial period — typically two or five years. This can give you a significantly lower rate than the standard market on a new-build purchase. Not all developers offer it, and it is worth asking specifically if you are considering a new-build home.
Watch Out for These Hidden Costs in Mortgage Deals
Arrangement Fees
Many mortgage deals come with an arrangement or product fee, typically between £999 and £2,000. You can usually add this to the mortgage, but if you do, you will pay interest on it over the full term. On a £1,500 fee added to a 25-year mortgage at 5%, the true cost is significantly higher than £1,500. Always calculate the total cost of the deal including fees — not just the headline rate.
Early Repayment Charges (ERCs)
If you want to leave your mortgage before the fixed period ends — whether to remortgage or because you are moving — you will almost certainly face an early repayment charge. ERCs on a 5-year fix can be as high as 5% of the outstanding balance in year one, reducing each year after. On a £200,000 mortgage, 5% is £10,000. That is a serious cost to factor in before you commit to a long fixed period.
Valuation and Legal Fees
When you take out a mortgage, the lender will value the property to make sure it is worth what you are paying for it. Some deals include a free valuation; others charge between £150 and £1,500 depending on the property value. On top of that, you need a solicitor to handle the conveyancing — typically £1,000 to £2,500 for a first time buyer purchase. Some mortgage deals offer a cashback incentive that can offset these costs.
Final Words
Finding the best mortgage deal as a first time buyertakes research, planning, and the right guidance. You need to look beyond the headline rate, understand how your deposit size affects your options, and make sure the deal you choose fits your life — not just your budget today.
BM14 Finance makes this process straightforward. Our experienced mortgage advisors search the whole market on your behalf, helping you find the right deal for your deposit size, income, and goals. We work with buyers every day and understand exactly what lenders are looking for. Alongside mortgage advice, we provide comprehensive insurance services: traditional life insurance, income protection, critical illness cover, over 50s cover, whole of life insurance, and buildings and contents insurance. Your home is your most important asset — make sure both the mortgage and the protection are right. Contact BM14 Finance today and speak to a real advisor who will give you real guidance.