First-time buyers – why support from brokers is so vital right now

Buying a home has become an increasingly difficult milestone for many first-time buyers (FTBs) in recent years, with rising house prices and stagnant wages making saving for a deposit a significant challenge. Additional economic pressures such as soaring inflation, higher interest rates, and a changing political landscape have exacerbated affordability issues, making the process of stepping onto the property ladder more daunting than ever.

The Building Societies Association’s First-Time Buyer Report published last year highlights that the cost of becoming a first-time buyer is at its highest level in 70 years. Over the past three decades, the house price-to-income ratio has widened significantly, with house prices increasing 16 times over since 1982, while income levels have only risen by a factor of seven. The rising cost of renting further compounds these challenges, with government figures showing a nine per cent increase in rental costs in the 12 months to December 2024 alone.

These affordability challenges mean that many FTBs face obstacles in securing a mortgage and accessing homeownership. In response, lenders are considering ways to better support this demographic through more inclusive lending criteria and product innovation.

Brokers play a key role in guiding first-time buyers through these challenges, helping them navigate lending criteria and understand the options available. One of the primary ways lenders are supporting FTBs is by ensuring greater flexibility in loan-to-value (LTV) and loan-to-income (LTI) criteria. Higher LTV mortgages, offering up to 95 per cent financing, provide a viable solution for those struggling to save a large deposit. In addition, some lenders are now offering more flexible LTI ratios, recognising the evolving employment landscape where many individuals have multiple income sources.

As employment patterns shift, many FTBs now rely on varied income streams such as overtime, bonuses, commissions, and contract work. It is vital that lending policies reflect this diversity. Brokers can help first-time buyers by identifying lenders that accommodate different income structures, including self-employment, contract work, and zero-hours contracts. Flexible underwriting approaches can help ensure that these buyers are not unfairly excluded from mortgage opportunities.

Family support remains a crucial factor in helping FTBs enter the market, with the "Bank of Mum and Dad" historically playing a significant role in providing financial assistance. However, rising living costs have impacted the ability of some parents to gift large deposits. Brokers can explore alternative solutions with their clients, such as Joint Borrower Sole Proprietor (JBSP) mortgages, which allow up to four applicants to combine incomes to increase borrowing power without transferring property ownership. This structure enables parents to support their children’s homeownership ambitions without committing to a lump sum gift.

Brokers should also be aware of government-backed schemes designed to assist first-time buyers. Initiatives such as Shared Ownership, Discount Market Sale, and First Homes provide options for buyers to purchase properties at reduced rates. Additionally, the Own New Rate Reducer Scheme enables buyers to access lower mortgage rates with a five per cent deposit, supported by contributions from property developers to reduce monthly repayments.

The role of brokers in supporting FTBs is more important than ever. By staying informed about evolving lender policies and government initiatives, brokers can help first-time buyers access the best possible solutions for their individual circumstances. Addressing affordability challenges requires a combination of innovative lending practices, flexible underwriting, and collaborative efforts between brokers and lenders. With these strategies in place, first-time buyers can be empowered to take that all-important first step onto the property ladder.

Discover more on how Darlington Building Society can help your First Time Buyer clients here.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.