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