Financial Planning by Life Stage UK 2026 — Find Your SituationMoney 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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