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First Start Mortgages

  • Ideal for First Time Buyers looking to increase their borrowing power with the help of a sponsor.
  • Your monthly repayments will stay the same for a set period. 

Post Office Money® Mortgages are provided by Bank of Ireland UK

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE


Overview

First Start is a mortgage with a difference

First Start gives you more borrowing power and improves your chances of getting on the property ladder with the home you want. First Start uses a sponsor's income as well as your own, to boost how much you can borrow. A sponsor is a close relative, normally a parent or step-parent who is added as a co-borrower. 

It’s designed for first time buyers, but could also help if you’ve had a change in personal circumstances and need to buy a home.

So why is it different?

With First Start your sponsor could help with the purchase of your new home without having to contribute towards your deposit. Your sponsor can decide whether they want to be registered as a joint owner of the property.

First Start is a co-borrower mortgage. This means you’ll be borrowing together and both be jointly and individually liable for the monthly mortgage repayments and the total loan.

This information is designed to give you and your sponsor more details about how First Start works. A Post Office Mortgage Specialist will help you both decide if it’s right for you.

We recommend independent financial, legal and tax advice is taken in all cases.

An overview for applicants

Whether you’re buying your first home, or getting back onto the property ladder after a change in circumstances, First Start could help increase your borrowing power.

With more borrowing power comes more choice and this could be the difference between buying a stop gap property and one that you can live in for years to come.

An overview for sponsors

First Start could be the ideal way to help your children or close relatives buy a home. It uses your income, along with that of the person you’re sponsoring to work out how much they can borrow.

As a sponsor, you’ll still be liable for the monthly mortgage payments and total loan. It’s up to you whether you’re named as a joint owner and your independent financial and legal advisers will be able to help you work out what’s best for you. We’ll need evidence that the sponsor has had independent legal advice before completion if you choose not to be registered as a joint owner.

More borrowing power

The table below shows the difference between what you could borrow as a single applicant and the increased borrowing power you could achieve by combining your gross income with a sponsor.

The table below shows how much two applicants could borrow and the increased borrowing power you could achieve by replacing one applicant with a sponsor. 

Please note: The examples above are based on the incomes stated with no debts or commitments. Each customer’s circumstances may vary. An individual affordability assessment will determine how much you can borrow.

More borrowing power

As a single applicant

The table below shows the difference between what you could borrow as a single applicant and the increased borrowing power you could achieve by combining your gross income with a sponsor. 

 

Borrowing power on your own
Applicant income 1

£25,000

Applicant income 2 £0
Borrowing power £112,500
As a single applicant you could borrow £112,500

 

Borrowing power with First Start
Applicant income 1

£25,000

Sponsor income £50,000
Borrowing power £337,500
With the help of a sponsor you could borrow £337,500
£225,000 more borrowing power

 

As a joint applicant

The table below shows how much two applicants could borrow and the increased borrowing power you could achieve by replacing one applicant with a sponsor. 

Borrowing power with a partner
Applicant income 1

£32,000

Applicant income 2 £28,000
Borrowing power £270,000
As joint applicants you could borrow £270,000

 

Borrowing power with First Start
Applicant income 1

£32,000

Sponsor income £80,000
Borrowing power £500,000
With the help of a sponsor you could borrow £500,000
£230,000 more borrowing power

 

Please note: The examples above are based on the incomes stated with no debts or commitments. Each customer’s circumstances may vary. An individual affordability assessment will determine how much you can borrow. 

Key features and criteria

  • Borrow up to £500,000
  • A minimum 5% deposit is needed towards the purchase price
  • The applicant cannot own any other property at time of completion. This includes any investment property
  • The applicant needs to earn a minimum of £20,000 per annum
  • Affordability is worked out using the combined incomes of the sponsor and the highest earning applicant.
  • Maximum age for applicant at the end of the mortgage is 75
  • Maximum mortgage term is 35 years
  • The sponsor must be employed with a minimum income of £30,000 per annum and be a homeowner
  • The sponsor must be older than 18 and under 60 years old when you take out the mortgage, and cannot be older than 80 years old at the end of the mortgage term
  • The Direct Debit payment must be made from one bank account. You can decide on the contribution split to meet the monthly repayment

Ownership options

  • First Start allows the sponsor to choose whether to register as a joint owner of the property
  • The sponsor must get independent legal advice before completion if they choose not to be registered as a joint owner
  • If the sponsor chooses to be a joint owner, they’ll be registered as a property owner at the Land Registry. An additional 3% stamp duty land tax is payable on second residential homes

Important Information

We highly recommend independent financial, legal and tax advice is taken in all cases.

It’s important to note that you’re both jointly and individually liable for the monthly repayments, as well as the total loan.

If the mortgage falls into arrears you will be responsible for the debt and any subsequent shortfall. If payments are not met your credit rating could be impacted.

As a co-borrower the First Start mortgage will be used in future affordability calculations. This will be considered if you need to remortgage your own home. 

Tax considerations

We recommend you receive independent financial and tax advice to understand the below tax implications and how they may impact you.

Stamp duty land tax

Buyers of additional residential properties, such as second homes, need to pay an extra 3% in stamp duty. This will apply to sponsors if they decide to be a registered owner at the Land Registry.

Capital gains tax        

Anyone selling an additional property may need to pay capital gains tax on any profit. This includes jointly owned properties.

Inheritance tax

An additional property would form a part of a deceased estate for inheritance tax purposes if jointly owned

Legal advice

If the sponsor chooses not to be registered as a joint owner we’ll need evidence that the sponsor has had independent legal advice before completion.

Independent legal advice is advice from a solicitor who’s acting solely for the sponsor, and not involved in the purchase of the property.

The solicitor giving independent legal advice needs to be in a different firm or must have at least equal standing to the solicitor overseeing the conveyancing work. This means that if the conveyancing solicitor is a partner in the same firm, then the independent legal advice needs to be given by another partner of that firm.

What if the sponsor wants to leave the mortgage?

There may come a time when the sponsor wants, or needs, to be removed from the mortgage.

If so, we would treat this as a remortage with associated costs. You would need to meet our standard lending and affordability criteria in order to take on the mortgage on your own.

However, it’s worth noting that both you and the sponsor would need to agree for the sponsor to be removed from the mortgage. As this could affect the sponsor’s tax situation, we highly recommend getting independent financial, tax and legal advice.

First Start mortgages:

These rates are only available for new borrowers and are correct as of 03/11/2017.

These products are only available on a Capital Repayment basis, unless stated otherwise.

 

For help with key terms used in the product tables, please see the Definitions tab.

25% deposit (75% Loan to Value ratio) Compare our fixed rate 75% mortgages

3 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 2.09% fixed until 31/12/2020
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 3.9% APRC
Product fee £995
Additional benefits
  • £250 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  3% of the sum repaid until 31/12/2019, then 2% until 31/12/2020

 

5 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 2.49% fixed until 31/12/2022
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 3.8% APRC
Product fee £995
Additional benefits
  • £500 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  4% of the sum repaid until 31/12/2019, then 3% until 31/12/2021, then 2% until 31/12/2022

 

Representative example:

A mortgage of £169,995 payable over 23 years initially on a fixed rate for 3 years at 2.09% and then reverting to our tracker rate of 3.99% above Bank of England Base Rate for the remaining 20 years would require 36 monthly payments of £790 and 234 monthly payments of £974.

The total amount payable would be £257,553 made up of the loan amount plus interest (£86,338), product fee (£995), valuation fee (£0), funds transfer fee (£30) and lending fee (£195).

The overall cost for comparison is 3.9% APRC representative.

15% deposit (85% Loan to Value ratio) Compare our fixed rate 85% mortgages

3 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 2.39% fixed until 31/12/2020
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 4.0% APRC
Product fee £995
Additional benefits
  • £400 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  3% of the sum repaid until 31/12/2019, then 2% until 31/12/2020

 

5 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 2.69% fixed until 31/12/2022
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 3.8% APRC
Product fee £0
Additional benefits
  • £500 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  4% of the sum repaid until 31/12/2019, then 3% until 31/12/2021, then 2% until 31/12/2022

 

Representative example:

A mortgage of £170,000 payable over 30 years initially on a fixed rate for 5 years at 2.69% and then reverting to our tracker rate of 3.99% above Bank of England Base Rate for the remaining 25 years would require 60 monthly payments of £689 and 300 monthly payments of £834.

The total amount payable would be £291,865 made up of the loan amount plus interest (£121,640), product fee (£0), valuation fee (£0), funds transfer fee (£30) and lending fee (£195).

The overall cost for comparison is 3.9% APRC representative.

10% deposit (90% Loan to Value ratio) Compare our fixed rate 90% mortgages

3 year fixed rate with additional benefits and cashback (minimum loan size £50,000)
Initial rate 2.89% fixed until 31/12/2020
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 4.1% APRC
Product fee £0
Additional benefits
  • £250 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  3% of the sum repaid until 31/12/2019, then 2% until 31/12/2020

 

5 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 3.29% fixed until 31/12/2022
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 4.0% APRC
Product fee £0
Additional benefits
  • £250 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  4% of the sum repaid until 31/12/2019, then 3% until 31/12/2021, then 2% until 31/12/2022

 

Representative example:

A mortgage of £186,890 payable over 28 years initially on a fixed rate for 3 years at 2.89% and then reverting to our tracker rate of 3.99% above Bank of England Base Rate for the remaining 25 years would require 36 monthly payments of £812 and 300 monthly payments of £962.

The total amount payable would be £318,135 made up of the loan amount plus interest (£131,020), product fee (£0), valuation fee (£0), funds transfer fee (£30) and lending fee (£195).

The overall cost for comparison is 4.2% APRC representative.

5% deposit (95% Loan to Value ratio) Compare our fixed rate 95% mortgages

5 year fixed with additional benefits and cashback (minimum loan size £50,000)
Initial rate 5.19% fixed until 31/12/2022
Followed by Bank of England Base Rate (currently 0.50%) plus 3.99% for the rest of the term 4.49% variable
The overall cost for comparison is 4.7% APRC
Product fee £0
Additional benefits
  • Higher lending charge paid by Lender
  • £500 cashback
  • Standard valuation fee paid by Lender
Early repayment charges  4% of the sum repaid until 31/12/2019, then 3% until 31/12/2021, then 2% until 31/12/2022

 

Representative example:

A mortgage of £145,000 payable over 35 years initially on a fixed rate for 5 years at 5.19% and then reverting to our tracker rate of 3.99% above Bank of England Base Rate for the remaining 30 years would require 60 monthly payments of £749 and 360 monthly payments of £692.

The total amount payable would be £294,140 made up of the loan amount plus interest (£148,915), product fee (£0), valuation fee (£0), funds transfer fee (£30) and lending fee (£195).

The overall cost for comparison is 4.8% APRC representative.

Definitions

Definitions

Approval in Principle (AIP): An AIP indicates how much you could borrow based on the information you have provided, it performs various criteria and credit reference agency checks, and gives a conditional decision to lend based on its findings.

APRC: Annual Percentage Rate of Charge - this shows the overall cost of borrowing, taking into account the term, interest rate and other costs.

Higher Lending Charge: A fee which may be charged if the amount borrowed is more than a given percentage of the value of the property. The lender will use the fee for an insurance policy to protect them against financial loss in the event of a borrower not meeting their mortgage payments. The fee is usually payable in full up front. You may be liable for any mortgage shortfall debt if after possession the sale proceeds are not enough to repay your outstanding debt. Choose a Post Office Money mortgage and the Higher Lending Charge is paid by the lender for mortgages above 75% LTV. No Higher Lending Charge is payable for mortgages up to 75% LTV. See the Lending Criteria for more information.

Loan to Value (LTV): It’s the amount of mortgage expressed as a percentage of the value of the property or purchase price, whichever is lower. For example, a mortgage of £80,000 on a purchase price of £100,000 would be 80% LTV. If the valuation of the property is lower than the price you've agreed, the LTV will be based on the valuation.

No product fee: There is no prodct fee to pay. This is ideal if you do not want to pay a product fee or add one to your mortgage.

Overall cost for comparison: The total cost of a loan, including interest charges and product fees, shown as a percentage rate. The calculation assumes that you keep the mortgage for the full term. APRC is the industry standard calculation and allows you to directly compare mortgages from all lenders.

Product fee: This is a fee charged on some mortgages as part of the product. It can be paid upfront or added to the loan. If you add it to your mortgage it will increase your outstanding balance and interest will be charged for the duration of the mortgage.

Standard legal fees: If your mortgage states that standard legal fees are paid by the lender, the lender will pay the fees if you use their nominated solicitors. Terms and conditions apply, additional legal work may incur additional fees, please refer to the General Lending Criteria for full details.

Standard valuation: Also known as a lender's valuation, this is a basic assessment that’s carried out on a property to establish its condition and value. If your mortgage states that valuation fee is paid by the lender, the lender will pay for one standard valuation on the application. You can upgrade to a full HomeBuyer survey for an additional fee.

FAQs

FAQs

What if the sponsor wants to leave the mortgage?

There may come a time when the sponsor wants, or needs, to be removed from the mortgage.

If so, we would treat this as a remortage with associated costs. You would need to meet our standard lending and affordability criteria in order to take on the mortgage on your own.

However, it’s worth noting that both you and the sponsor would need to agree for the sponsor to be removed from the mortgage. As this could affect the sponsor’s tax situation, we highly recommend getting independent financial, tax and legal advice.

What is independent legal advice?

If the sponsor chooses not to be registered as a joint owner we’ll need evidence that the sponsor has had independent legal advice before completion.

Independent legal advice is advice from a solicitor who’s acting solely for the sponsor, and not involved in the purchase of the property.

The solicitor giving independent legal advice needs to be in a different firm or must have at least equal standing to the solicitor overseeing the conveyancing work. This means that if the conveyancing solicitor is a partner in the same firm, then the independent legal advice needs to be given by another partner of that firm.

What are the tax considerations?

We recommend you receive independent financial and tax advice to understand the below tax implications and how they may impact you.

Stamp duty land tax

Buyers of additional residential properties, such as second homes, need to pay an extra 3% in stamp duty. This will apply to sponsors if they decide to be a registered owner at the Land Registry.

Capital gains tax       

Anyone selling an additional property may need to pay capital gains tax on any profit. This includes jointly owned properties.

Inheritance tax

An additional property would form a part of a deceased estate for inheritance tax purposes if jointly owned.

Who can be a sponsor?

A sponsor is a close relative, normally a parent or step parent, who is added as a co-borrower.

It is important that you have reviewed the products above in full before progressing with an online application.

Found the mortgage that suits you?

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Small print

Please note our online mortgage application is only compatible with Internet Explorer 9+, Google Chrome 34+, Firefox 28+, Safari 5 and 7 web browsers and is not optimised for mobile phones.

Subject to status and lending criteria. Written illustrations available upon request. Borrowers must be aged 21 or over.

Post Office Limited is an appointed representative of Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, FRN 512956. You can check this on the Financial Services Register by visiting the website www.fca.org.uk/register or by contacting the Financial Conduct Authority (FCA) on 0800 111 6768. Bank of Ireland UK is a trading name of Bank of Ireland (UK) plc which is registered in England & Wales (No. 07022885). Registered Office: Bow Bells House, 1 Bread Street, London, EC4M 9BE. Post Office Limited is registered in England and Wales (No. 2154540). Registered Office: Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ. Post Office Money and the Post Office Money logo are registered trademarks of Post Office Limited.