Why the best first-time buyer mortgage might not come from your bank

First-time buyers could be missing out on mortgages better suited to their circumstances by limiting their search to their existing bank, according to mortgage expert Sam Fox, founder of UKMC.

Warrington-based Fox, who advises buyers across the UK on mortgage options, says familiarity with a high-street bank can give first-time buyers a false sense that they are accessing the most suitable deal available.

“For many first-time buyers, the search for a mortgage starts with the bank they already use. I understand why. Your salary goes into the account, you have years of transaction history and there is already a level of trust,” says Fox.

“But familiarity does not always mean suitability, and that is where many first-time buyers limit their options without realising it.”

The UK mortgage market extends well beyond the handful of high-street brands most consumers recognise, with more than 100 active lenders and thousands of mortgage products available across banks, building societies, specialist lenders and other providers.

According to Fox, this breadth of choice can be particularly important for buyers with smaller deposits or more complex financial circumstances.

“Lenders assess mortgage applications differently. While all providers must carry out affordability checks, each lender has its own approach to income, expenditure and risk,” he says.

“For buyers with smaller deposits, self-employed income, bonuses, commission or less traditional financial circumstances, those differences can be significant. A decline from one provider does not necessarily mean you cannot secure a mortgage elsewhere. It may simply mean another lender’s criteria fit your situation better.”

Building societies offer an alternative

Fox also believes first-time buyers should not overlook building societies, which continue to play a significant role in the UK mortgage market.

Sector-wide data from the Building Societies Association puts building societies’ share of UK mortgage balances at around 29 per cent. Some building societies have also performed strongly in customer satisfaction surveys.

“The right mortgage is not always attached to the biggest brand,” says Fox. “Building societies and specialist lenders can offer different approaches to lending, and in some circumstances those criteria may be a better fit for an individual buyer.”

The range of products available illustrates the importance of considering the wider market. Skipton Building Society’s Track Record mortgage, for example, has offered 100% loan-to-value lending for eligible renters with a strong history of meeting rental payments, while major lenders including Lloyds, NatWest and Nationwide continue to offer 95% LTV products.

These products are aimed at different types of borrowers, highlighting why comparing the wider market can be important for first-time buyers.

The lowest rate is not necessarily the best deal

Fox also warns buyers against focusing exclusively on the lowest advertised interest rate.

Arrangement fees on residential mortgages can vary significantly between products, while other charges may also apply depending on the mortgage. These costs can affect the overall value of a deal over the life of the mortgage.

“A mortgage is a long-term financial commitment, so the cheapest rate on paper is not always the best option,” says Fox. “First-time buyers should look at the complete package and consider whether the mortgage fits their plans, rather than simply choosing the rate that appears first in a search result.”

Why independent advice can help

For Fox, this is one of the areas where independent mortgage advice can add value.

“When you go directly to your bank, you only see the products that bank offers. A broker can compare options across a much broader range of lenders and help you understand which products may be suitable for your circumstances,” he says.

“That does not mean the recommendation will never come from a major bank. In some cases, it will. The difference is that the decision is based on suitability rather than familiarity.”

For first-time buyers navigating what can be one of the biggest financial decisions of their lives, Fox says the key message is simple: do not assume your existing bank is automatically the best place to start or finish your mortgage search.

“The best mortgage may not be the one sitting on the high street,” says Fox. “It may be the one you discover by looking beyond it.”