Some lenders charge more for first-time buyers

Most first time buyers have no idea this is happening, and that is the problem. Same house, same 10% deposit, same mortgage, yet some lenders are charging them over £1,000 more across five years simply for being new. Lenders will say a buyer with no mortgage history is more of an unknown, and to a point that is fair. But the deposit here is identical, and someone who has paid rent on time every month for years has a track record too. It is the people who have scrimped hardest to get on the ladder who end up paying the most. My advice to any first time buyer: never assume your own bank is the cheapest. Speak to a mortgage broker who can compare lenders side by side, as not all lenders charge first time buyers more.

Brokers see this every day, but most first-time buyers have no idea it’s happening, so it’s very much under the radar. There’s nothing sinister in it. Lenders manage their mortgage books like a balance sheet, and at any given time they’ll be chasing certain types of business and cooling on others to keep their risk where they want it. Movers usually bring equity and a track record of paying a mortgage, so if a lender has had its fill of high loan-to-value first-time buyer lending, it will simply nudge that pricing up. Commercially it makes sense, but it does sit awkwardly when the same lenders talk up how much they support first-time buyers. Being new to the market shouldn’t mean paying more for the same deal. My advice is to ignore the headline rate and compare the total cost over the fixed term, including fees and any cashback. Better still, use a whole-of-market broker who knows which lenders want your business this week, because that changes far more often than most people realise

First-time buyers could reasonably assume a mortgage specifically labelled for them would be at least as competitive as the equivalent deal for any other buyer, so these differences are surprising.

It is another reason not to shop by product name alone. First-time buyer deals can include different rates, fees or cashback, and the important comparison is the total cost of the mortgage rather than whether it sits in a special first-time buyer range. Someone buying their first home should compare the whole market available to them, because being a first-time buyer does not automatically mean the product carrying that label is the best deal.

We're constantly telling first-time buyers that we want to help them onto the property ladder, yet some lenders appear to be charging them more for the privilege. There's a certain irony in that!

Different pricing can reflect different risk assessments, acquisition strategies and product incentives. But being a first-time buyer doesn't automatically make someone a higher-risk borrower.

What concerns me is how easily these differences can go unnoticed. Most buyers understandably focus on the headline interest rate, without appreciating how product fees, cashback and eligibility affect the overall cost.

First-time buyers shouldn't assume that a product marketed specifically for them is necessarily their best option.

My advice is simple: compare the whole mortgage, not the marketing label. The cheapest headline rate isn't always the cheapest mortgage, and a first-time buyer product isn't automatically the most suitable deal for a first-time buyer.

Support for first-time buyers needs to show up in the sums, not just the slogans.

If a first-time buyer is paying more than a home mover borrowing the same amount at the same loan-to-value, I would want the lender to explain what justifies the difference. We should establish whether the products offer different benefits before drawing conclusions.

I would also be wary of assuming that having no previous mortgage automatically makes someone a less reliable borrower.

For buyers, the useful question is: “What will this deal cost me over the fixed period, and what am I getting for any extra cost?” Ask an adviser to compare all eligible options, including fees and incentives.

Getting the keys is a big enough financial commitment. Buyers deserve to understand exactly what they are signing up to.

First-time buyers already face a mountain of costs getting onto the property ladder, so discovering some mortgage deals could cost them over £1,000 more than an equivalent deal for someone moving home is a real kick in the teeth! Surely the first rung on the property ladder shouldn’t come with an admission fee? Lenders have different pricing strategies, and there may be genuine reasons for the differences, but I’d certainly like to hear their explanations. Not every lender does this. Some offer identical rates, while others actually reward first-time buyers. My advice? Don’t assume a mortgage labelled ‘first-time buyer’ is automatically your cheapest option. Compare the rates, fees, cashback and overall cost. Getting onto the property ladder is hard enough without paying extra for the privilege of being new to it! First-time buyers deserve clear pricing, fair treatment and proper advice, not another financial hurdle before they’ve even picked up the keys.

It’s genuinely under the radar, because most first-time buyers assume the rate is the rate. You see a headline number on a comparison site and take it at face value, without realising the same product can be priced differently depending on your status. The why is more interesting than it looks, and comes down to two commercial strategies. Some lenders load a small premium because a first-time buyer at high loan-to-value is statistically a touch higher risk, with thinner equity. Others go the other way and sweeten the deal, because they want to win you young and keep you for decades. One big lender here offers first-time buyers cashback for exactly that reason. The amounts are small, a few pounds a month on a large loan, so it’s more a principle worth knowing than a scandal. What should buyers do? Don’t trust the shop window. The best-advertised rate isn’t always the best rate for you, because your status changes the price, and that’s where comparing the whole market earns its keep.