First-time buyer & second-time buyer: What you need to know

Who is classed as a first-time buyer?

A first-time buyer is someone who has never owned a residential property anywhere in the world, either outright (without mortgage) or jointly with someone else. That includes ownership through inheritance, gifted property, or shared ownership.

So, if you’ve never owned a home, you’re a first-time buyer. ✅

If you’re owned or inherited a home before, even if you no longer own it, you’re not a first-time buyer. ❌

If you previously owned a home with a partner and you’ve since sold it and moved in with your family, you’re not a first-time buyer. ❌

How do banks and HMRC know if you’re a first-time buyer?

Both lenders and HMRC can check your property ownership history. When you apply for a mortgage, your lender will ask whether you’ve owned a property before, and they’ll verify your answer using your credit file and Land Registry records.

HMRC also uses National Insurance numbers and Land Registry data to confirm property ownership for Stamp Duty purposes. So even if you’ve sold your previous home or owned a share of one overseas, it will still appear in official records.

Not sure what stamp duty is or how it works? Take a look at our first-time buyers’ guide to stamp duty. 

Can you be a first-time buyer twice?

Usually not as once you’ve owned a property, you lose your first-time buyer status.

But, some mortgage lenders have their own criteria and may treat you as a first-time buyer if you haven’t owned a home for a certain number of years. For example, Nationwide’s Helping Hand mortgage classes applicants as first-time buyers if they haven’t had a mortgage in the last three years. 

However, even if your lender considers you a first-time buyer, you’ll still be classed as a second-time buyer by HMRC if you’ve owned a home before. So, while you may get certain first-time buyer benefits from your lender, Stamp Duty may still be payable.

Do both buyers need to be first-time buyers?

No, a first-time buyer and a homeowner can buy a home together. This does come with some drawbacks, but some advantages too. For example, you won’t be eligible for stamp duty relief, so if the property costs £125,000 or more, you may have to pay tax on your purchase. 

However, if you or your partner have managed to build equity in the existing property, this may make it easier to afford your next one. You could use the equity as the deposit on your new property, or use some of the money from the sale for fees or stamp duty costs. 

It’s often worth getting advice from a mortgage broker to compare your options. They’ll help you work out whether it’s best to buy a property with a joint mortgage or in one buyer’s name. In some cases, it can make sense for the first-time buyer to be the sole owner, and for their partner to be listed as a guarantor instead.

Can I use a Lifetime ISA if my partner already owns a home?

Yes, a Lifetime ISA is linked to you as an individual, rather than the property itself. So you can still use your LISA even if your partner is already a homeowner. They just won’t be able to use their own LISA when buying a property – but they could use it for retirement. 

Learn more: Is a Lifetime ISA worth it?

How much can we borrow together?

Most lenders will offer between 4 and 4.5 times your combined annual income. So if you earn £35,000 and your partner earns £30,000, you could borrow between £260,000 and £292,000, depending on the lender and your financial situation.

It may be possible to borrow 5 or even 6 times your income if you have a job that lenders consider ‘professional’. Criteria can vary from one lender to the next, but most will offer bigger mortgages to doctors, nurses, lawyers and accountants, for example. Find out more here.

If your partner has equity from their existing home, this can also go towards your deposit, making it easier to buy a more expensive property or take out a smaller mortgage.

If you’re struggling to borrow enough, you could explore affordability-boosting options such as:

• Guarantor mortgages
• Shared ownership
• Interest only or part and part mortgage deals

What is the difference between first-time and second-time buyer mortgages?

There’s technically no such thing as first-time buyer mortgages and second-time buyer mortgages, but first-time buyers are sometimes eligible for specialist schemes and discounts to help them get on the ladder. 

With the First Homes scheme, for example, you can get a 30% discount on a new build home. This means you’ll be able to buy with a much smaller deposit and mortgage than you usually would. Your monthly repayments will be more manageable too, leaving you with more cash in the bank for bills, furniture, and multiple tins of Farrow & Ball. 

Learn more: What are the benefits of being a first-time buyer?

When buying a property together, lenders will look at your combined income, deposit, and existing financial commitments. It doesn’t really matter if one of you is a homeowner and the other one isn’t, as long as you meet the lender’s criteria and can afford the repayments.