Money & Budgeting
Money Guide for First-Time Buyers UK — Home Purchase Finances
Financial guide for first-time buyers UK. Saving for deposit, mortgage affordability, buying costs, government schemes, and purchase preparation.
Buying your first home is a major financial milestone. From saving for a deposit to completing the purchase, here’s everything you need to know.
How Much Can You Afford?
Mortgage Calculation
| Your Income |
Can Borrow (4.5x) |
| £30,000 |
£135,000 |
| £40,000 |
£180,000 |
| £50,000 |
£225,000 |
| £60,000 |
£270,000 |
| Joint £80,000 |
£360,000 |
Total Purchase Budget
| Mortgage + Deposit |
= Budget |
| £180,000 + £20,000 |
£200,000 |
| £225,000 + £25,000 |
£250,000 |
| £270,000 + £30,000 |
£300,000 |
Affordability Test
| Monthly Mortgage |
Lenders Check |
| Can you afford higher rates? |
Stress tested |
| Existing debts? |
Reduce borrowing |
| Spending habits? |
They look at these |
Deposit Saving
Target Amount
| Deposit |
On £250,000 Home |
Benefits |
| 5% |
£12,500 |
Entry level |
| 10% |
£25,000 |
Better rates |
| 15% |
£37,500 |
Good rates |
| 20% |
£50,000 |
Best rates |
Saving Strategy
| Monthly |
Time to £25,000 |
| £300 |
7 years |
| £400 |
5 years |
| £500 |
4 years |
| £750 |
2.8 years |
Where to Save
| Option |
Benefit |
| Lifetime ISA |
25% bonus (best) |
| Cash ISA |
Tax-free |
| Regular saver |
Good rates |
| Help to Buy ISA |
Closed to new, honor existing |
Lifetime ISA
| Detail |
Amount |
| Maximum per year |
£4,000 |
| Government bonus |
£1,000 (25%) |
| Property limit |
£450,000 |
| Ages |
18-40 to open |
Other Purchase Costs
Budget For These
| Cost |
Amount |
| Stamp Duty |
£0 to £425k |
| Solicitor |
£1,000-2,000 |
| Survey |
£400-1,500 |
| Mortgage fees |
£0-2,000 |
| Removal costs |
£300-1,500 |
| Immediate purchases |
£1,000-5,000 |
| Total extras |
£3,000-12,000 |
First-Time Buyer Stamp Duty Relief
| Property Value |
Stamp Duty |
| Up to £425,000 |
£0 |
| £425,001-625,000 |
5% on portion above £425k |
| Over £625,000 |
No relief (standard rates) |
Government Schemes
Available Options
| Scheme |
What It Does |
| Lifetime ISA |
25% bonus on savings |
| First Homes |
30%+ discount on new-builds |
| Shared Ownership |
Buy portion, rent rest |
| Own New Rate |
Temporarily reduced rates |
Shared Ownership
| Detail |
How It Works |
| Buy |
25-75% share |
| Rent |
On remainder (reduced) |
| Staircasing |
Buy more over time |
| Best for |
Those priced out |
Mortgage Types
Fixed vs Variable
| Type |
Feature |
| Fixed (2-5 years) |
Payments stable |
| Variable/tracker |
Payments move with rates |
| First-time buyers |
Usually choose fixed |
How Rates Affect Payments
| Mortgage £200,000 |
Monthly (25 years) |
| 4% |
~£1,055 |
| 5% |
~£1,169 |
| 6% |
~£1,289 |
Mortgage Fees
| Fee Type |
Typical |
| Product fee |
£0-2,000 |
| Valuation fee |
£0-500 |
| Higher LTV fee |
Sometimes |
| Add to mortgage? |
Usually possible |
Getting Mortgage Ready
Steps Before Applying
| Action |
Why |
| Check credit report |
Fix issues |
| Reduce debt |
Improves affordability |
| Stop gambling transactions |
Lenders check |
| Stable income |
3+ months if new job |
| Don’t change jobs |
If possible |
Documents Needed
| Document |
Have Ready |
| ID |
Passport/driving licence |
| Proof of address |
Bills, statements |
| Pay slips |
3 months |
| Bank statements |
3-6 months |
| P60 |
Annual tax document |
| Deposit proof |
Where it’s from |
Mortgage in Principle
| What It Is |
Pre-approval |
| Get before |
Searching seriously |
| Shows sellers |
You’re serious |
| Valid for |
30-90 days |
The Buying Process
Timeline
| Stage |
Timing |
| Save deposit |
Years |
| Mortgage in principle |
1 week |
| Property search |
Weeks-months |
| Offer accepted |
After viewings |
| Conveyancing |
8-14 weeks |
| Exchange |
Committed |
| Completion |
Moving day |
After Offer Accepted
| Step |
Action |
| Instruct solicitor |
Immediately |
| Mortgage application |
Formally apply |
| Survey |
Commission |
| Wait |
Searches, paperwork |
| Exchange |
Pay deposit (usually 10%) |
| Complete |
Get keys |
First-Time Buyer Mistakes
| Mistake |
Better |
| Not getting MIP first |
Get it before searching |
| Ignoring other costs |
Budget £5,000+ extras |
| Not checking credit |
Fix issues early |
| Rushing into gazump |
Don’t panic buy |
| Only fixed costs |
Budget for maintenance |
| Max borrowing |
Borrow what’s comfortable |
After Purchase
New Expenses
| Cost |
Monthly |
| Mortgage |
£_____ |
| Council Tax |
£100-300 |
| Buildings insurance |
£15-50 |
| Utilities |
£150-300 |
| Maintenance fund |
£100-200 |
First-Time Owner’s Fund
| Purpose |
Amount |
| Emergency repairs |
£3,000-5,000 |
| Appliances |
Budgeted |
| Decorating |
Over time |
Timeline to Purchase
If Starting Now
| Stage |
Target |
| LISA opened |
Now |
| Credit checked |
Now |
| Saving £500/month |
Ongoing |
| £25k deposit reached |
3-4 years |
| Mortgage in principle |
When ready |
| Purchase complete |
Within months |
The First-Time Buyer Checklist
| Action |
Status |
| Budget calculated |
□ |
| LISA opened |
□ |
| Saving regularly |
□ |
| Credit checked |
□ |
| Debt reduced |
□ |
| Documents ready |
□ |
| MIP obtained |
□ |
| Solicitor lined up |
□ |
| Extra costs budgeted |
□ |
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