Buying your first home is one of the biggest financial milestones you will reach. It is also one of the most expensive. This guide covers everything UK first-time buyers need to know — from saving a deposit to getting the keys — with real numbers and practical advice.
Deposit: How Much You Need
Your deposit is the upfront cash you pay towards the property. The bigger your deposit, the better mortgage rates you will be offered.
| Deposit % | On a £200,000 Property | On a £300,000 Property |
|---|---|---|
| 5% | £10,000 | £15,000 |
| 10% | £20,000 | £30,000 |
| 15% | £30,000 | £45,000 |
| 25% | £50,000 | £75,000 |
Most lenders require a minimum 5% deposit. A 10% deposit unlocks significantly better interest rates. A 25% deposit gives you access to the cheapest deals available.
How Deposit Size Affects Your Mortgage Rate
| LTV (Loan-to-Value) | Deposit | Typical Rate | Monthly Payment (25yr, £200k property) |
|---|---|---|---|
| 95% | 5% | 5.2% | £1,100 |
| 90% | 10% | 4.8% | £1,000 |
| 85% | 15% | 4.5% | £950 |
| 75% | 25% | 4.1% | £850 |
A 25% deposit saves you around £250 per month compared to a 5% deposit. Over 25 years, that adds up to £75,000 in interest savings.
Government Schemes
The UK government offers several schemes to help first-time buyers. These can significantly reduce the amount you need to save.
Lifetime ISA (LISA)
The Lifetime ISA is the most popular scheme for first-time buyers.
| Feature | Detail |
|---|---|
| Annual saving limit | £4,000 |
| Government bonus | 25% (up to £1,000 per year) |
| Age to open | 18–39 |
| Property price limit | £450,000 |
| Must be open for | 12 months before use |
How it works:
- Open a Cash LISA or Stocks & Shares LISA with a provider such as Moneybox, Skipton, or AJ Bell
- Save up to £4,000 per tax year
- The government adds 25% — up to £1,000 per year
- Use the funds when you complete on your first home (property up to £450,000)
Tip: A couple each contributing £4,000 per year gets £2,000 in free government bonuses annually. Open a LISA as early as possible — the 12-month waiting period means you need to plan ahead.
Shared Ownership
Shared ownership lets you buy a share of a property (25–75%) and pay rent on the remaining share. You can staircase to full ownership over time.
| Feature | Detail |
|---|---|
| Minimum share | 25% |
| Maximum share | 75% |
| Rent on remaining share | Typically 2.75% per year |
| Income limit | £80,000 (£90,000 in London) |
| Deposit needed | On your share only |
This is a good option if you cannot afford a full deposit. You only need a mortgage for your share, and the deposit is based on that share too.
First Homes Scheme
The First Homes scheme offers new-build homes at a discount of at least 30% compared to market value.
| Feature | Detail |
|---|---|
| Minimum discount | 30% |
| Income limit | £80,000 (£90,000 in London) |
| Local connection | Required |
| Property type | New-build only |
The discount is locked in and applies when you resell. This means the next buyer also benefits from the reduced price.
Mortgages: How Much You Can Borrow
Most UK lenders offer 4–5 times your annual salary. Two incomes mean more borrowing power.
Borrowing Power by Salary
| Salary | 4× Salary | 4.5× Salary | 5× Salary |
|---|---|---|---|
| £25,000 | £100,000 | £112,500 | £125,000 |
| £30,000 | £120,000 | £135,000 | £150,000 |
| £35,000 | £140,000 | £157,500 | £175,000 |
| £40,000 | £160,000 | £180,000 | £200,000 |
| £50,000 | £200,000 | £225,000 | £250,000 |
Two incomes example: £30,000 + £25,000 = £55,000 combined. At 4.5× salary: £247,500 borrowing power.
Get a Mortgage Agreement in Principle
Before you start house hunting, get an Agreement in Principle (AIP) from a lender. This is a conditional offer showing how much they will lend you. It is not a guarantee, but it shows sellers you are a serious buyer.
What you need:
- Last 3 months of bank statements
- Last 3 months of payslips (or 2 years of tax returns if self-employed)
- Proof of ID and address
- Details of any debts
Mortgage Types
Fixed rate: Interest rate stays the same for 2, 3, or 5 years. Predictable payments, ideal for budgeting. Most first-time buyers choose this.
Variable rate: Rate can change at any time, usually following the Bank of England base rate. Lower initial rates but less certainty.
Tracker rate: Follows the base rate at a set margin (e.g., base rate + 0.75%). Rises and falls with the market.
Tip: First-time buyers almost always choose a fixed rate. A 2 or 3-year fix gives you flexibility to remortgage when your circumstances change.
Costs: What You Actually Pay
The deposit is only part of the picture. Budget for all of these costs:
| Cost | Typical Amount |
|---|---|
| Deposit | 5–25% of property price |
| Stamp duty | See table below |
| Legal fees (conveyancing) | £1,000–£2,000 |
| Survey | £300–£1,500 |
| Mortgage arrangement fee | £0–£2,000 |
| Mortgage valuation fee | £0–£500 (often free) |
| Removal costs | £300–£2,000 |
| Buildings insurance | £100–£300/year |
Stamp Duty for First-Time Buyers
First-time buyers in England and Northern Ireland pay no stamp duty on the first £425,000 of a property costing up to £625,000.
| Property Price | Stamp Duty Rate (First-Time Buyer) |
|---|---|
| Up to £425,000 | 0% |
| £425,001–£625,000 | 5% on the portion above £425,000 |
| Over £625,000 | Standard rates apply (no first-time relief) |
Stamp Duty Examples
| Scenario | Property Price | Stamp Duty |
|---|---|---|
| First-time buyer | £300,000 | £0 |
| First-time buyer | £400,000 | £0 |
| First-time buyer | £500,000 | £3,750 |
| First-time buyer | £600,000 | £8,750 |
| First-time buyer | £700,000 | £12,500 (standard rates) |
Note: Scotland and Wales have different stamp duty systems (LBTT and LTT respectively). Check the rates for your nation.
The Buying Process
Here is the step-by-step timeline from finding a property to getting the keys:
Step 1: Find a Property (Weeks 1–6)
Search on Rightmove, Zoopla, and OnTheMarket. Visit properties in person. Consider commute times, schools, and local amenities.
Step 2: Make an Offer (Week 6)
Make an offer through the estate agent. Most properties have room for negotiation — start 5–10% below the asking price. If accepted, the property is “sold subject to contract” (SSTC).
Step 3: Apply for a Mortgage (Week 7–8)
Formally apply for your mortgage. The lender will check your credit score, value the property, and offer you terms and a rate.
Step 4: Get a Survey (Week 8–9)
Do not skip the survey. It can reveal hidden problems that cost thousands to fix.
| Survey Type | Cost | Best For |
|---|---|---|
| Homebuyer’s Report (Level 2) | £300–£500 | Most properties |
| Full Structural Survey (Level 3) | £500–£1,500 | Older, larger, or unusual properties |
If the survey reveals issues, you can use this to renegotiate the price or walk away.
Step 5: Instruct a Solicitor (Week 7–8)
Your solicitor (conveyancer) handles the legal side — checking the title, raising enquiries, managing the exchange of contracts, and registering you as the new owner. Budget £1,000–£2,000.
Step 6: Exchange Contracts (Week 10–11)
Once the mortgage is approved and all legal checks are complete, you exchange contracts. At this point you are legally committed to buy, you pay the deposit, and a completion date is set.
Step 7: Complete and Get the Keys (Week 12)
On completion day, the remaining funds are transferred and you collect the keys. You are now a homeowner.
Total timeline: Typically 8–12 weeks from offer acceptance to completion.
Worked Example
Here is a complete breakdown for a first-time buyer:
| Item | Amount |
|---|---|
| Property price | £275,000 |
| Salary | £30,000 |
| Mortgage (4.5× salary) | £135,000 |
| Deposit (10%) | £27,500 |
| Stamp duty | £0 (first-time buyer, under £425,000) |
| Legal fees | £1,500 |
| Survey (homebuyer’s report) | £400 |
| Mortgage arrangement fee | £1,000 |
| Removal costs | £500 |
| Total upfront costs | £30,900 |
Monthly mortgage payment at 4.5% over 25 years: approximately £750.
Tips for First-Time Buyers
- Save the biggest deposit possible: Every extra thousand pounds reduces your loan-to-value ratio, unlocking better mortgage rates and saving thousands in interest over the life of the mortgage
- Use a Lifetime ISA: If you are aged 18–39, open a LISA as early as possible. The 25% bonus on up to £4,000 per year is free money you should not miss
- Get a mortgage agreement in principle before house hunting: It shows sellers you are serious and prevents disappointment if you cannot borrow as much as you expected
- Never skip the survey: A £400 survey can save you from a £20,000 repair bill. If issues are found, you can renegotiate the price or walk away
- Budget for all costs: The deposit is only part of the picture. Stamp duty, legal fees, surveys, and removal costs add up to several thousand pounds
- Negotiate the price: Most properties sell for less than the asking price. Do not be afraid to make a lower offer
- Consider the total cost: Factor in council tax, buildings insurance, maintenance, and commute costs when choosing where to buy. A cheaper property far from work may cost more overall than a slightly more expensive one nearby
- Do not overstretch: Just because a lender offers you £300,000 does not mean you should spend it all. Leave room for unexpected costs and lifestyle expenses
- Avoid big purchases before completing: Do not buy a car or furniture on credit before your mortgage is approved. Lenders check your spending habits
- Use a mortgage broker: They can access deals you will not find directly and help you navigate the application process
References
- GOV.UK — gov.uk/buying-first-home
- MoneyHelper — moneyhelper.org.uk
- Which? — which.co.uk