Should First Time Buyers Continue Renting or Take the Leap into Homeownership?

Written on 9 March 2025 by Nicholas Mendes

Advice from a Mortgage Broker

Deciding whether to buy your first home or continue renting is a significant decision, especially in the current economic climate. Let's explore the factors influencing this choice to help you make an informed decision.

Rising Rental Costs: A Growing Concern

As of January 2025, the average UK rent reached £1,271 per month, with London averaging £2,025 per month. Notably, rents in London have decreased by 2.7% compared to last year, while other regions, such as the East of England, have seen increases of 6.0%, and the West Midlands experienced a rise of 7.9%.

The continuous rise in rental costs, driven by high demand and limited supply, shows no signs of abating. This trend makes renting increasingly expensive and prompts many to consider homeownership as a more stable and potentially cost-effective alternative.

Mortgage Rates: Current Landscape

In February 2025, the Bank of England reduced the base rate to 4.5%, leading to more competitive mortgage offerings. Santander, for instance, introduced fixed-rate mortgage deals at 3.99% for both two and five-year terms, available to borrowers with a 40% deposit.

While these rates are appealing, they primarily benefit those with substantial deposits. First-time buyers or those with smaller deposits may face higher rates, underscoring the importance of assessing personal financial situations and consulting with a mortgage advisor to explore available options.

Timing the Market: Is Now the Right Time?

Attempting to time the property market can be challenging. Consider the following:

Property availability - if mortgage rates decrease in the future, the property you desire may no longer be available
Market competition - a drop in property prices could lead to increased competition among buyers, potentially driving prices back up

Property ownership is often both a financial and emotional decision. If a property aligns with your needs, future plans, and budget, it may be the right time to buy. Historically, UK property values have shown long-term appreciation, offering potential financial benefits over time.

How to Find the Best First Time Buyer Mortgages

Finding the best first-time buyer mortgage involves researching and comparing different options to secure the most favourable deal. Consider the following:

Check your credit score – a good credit score improves your chances of getting better rates
Compare interest rates – look at fixed, variable, and tracker rates to find the best fit
Consider schemes – shared Ownership, and Lenders scheme supporting first time buyers can offer extra support
Assess fees and charges – factor in arrangement fees, valuation costs, and early repayment charges
Get a mortgage in principle – this helps show sellers you are a serious buyer
Seek professional advice – a mortgage broker can help you find the best deals tailored to your circumstances

Taking these steps can help you secure an affordable mortgage and make your first home purchase smoother.

Help for First Time Buyers

If you're a first-time buyer, several schemes and support options are available to help you get on the property ladder:

Shared ownership – allows you to buy a portion of a property (25-75%) and pay rent on the rest
Lifetime ISA (LISA) – a government-backed savings account offering a25% bonus (up to £1,000 per year) towards your first home
95% mortgage scheme – supports buyers with just a 5% deposit by offering government-backed loans
Joint borrower Sole Proprietor (JBSP) Mortgages – enables a family member to help with affordability by being on the mortgage without owning the property
Higher income multiple mortgages & deposit barrier schemes – some lenders offer mortgages based on 5-6 times salary and options to help overcome deposit challenges, making it easier to buy with a lower upfront amount

Exploring these options can make it easier to afford your first home and secure a good mortgage deal.

Final Thoughts

The decision to rent or buy hinges on individual circumstances, financial readiness, and long-term goals. While renting offers flexibility, homeownership provides stability and the opportunity to build equity.

If you're contemplating purchasing a home, consulting with a mortgage broker can provide personalized insights into affordability, mortgage options, and the best course of action tailored to your situation. Additionally, with our first time buyer mortgage calculator you'll be able to work out how much you can borrow on a first time buyer mortgage, based on your income.

Ultimately, the right time to buy is when it aligns with your personal and financial readiness.

Category:Nicholas Mendes