First-Time Buyer Guide

Buying your first home is one of the biggest financial commitments you'll ever make. It's also, genuinely, one of the most confusing. There's a language of its own (AIP, STC, LTV, chain, exchange), a pile of costs nobody warned you about, and decisions that will shape the next ten years of your life.

This guide is built specifically for first-time buyers. It covers everything that's different when you're buying your first place, rather than moving between homes. Deposits, schemes you may qualify for, stamp duty relief, how mortgages actually work, what to look for at viewings, and the mistakes we see first-time buyers make most often.

For the step-by-step "offer accepted to keys in hand" walkthrough, we have a separate Buyer Guide that covers the full legal and administrative process. Think of that as the "how" and this as the "what you need to know first".

In practice, most first-time buyers put down between 5% and 20% of the purchase price.

The smaller your deposit, the bigger your mortgage, and the higher the interest rate you'll typically be offered. A 10% deposit opens up better rates than 5%. A 15% to 20% deposit opens up the best rates lenders have.

• 5% deposit: possible via the Mortgage Guarantee Scheme, backed by the government to encourage lenders to offer 95% mortgages. Rates are at the higher end.
• 10% deposit: the rate you get improves noticeably.
• 15% to 20% deposit: best-in-class rates become available; monthly repayments drop.

For a £250,000 home, 5% is £12,500, 10% is £25,000, and 20% is £50,000.

Remember: the deposit is not the only money you'll need up front. Keep reading for the hidden costs.

If you're not there yet, three things will help:

• Lifetime ISA (LISA): if you're 18 to 39, you can open one and pay in up to £4,000 a year. The government adds a 25% bonus on top, up to £1,000 a year. You can use it for a first home worth up to £450,000 (as long as you've held the LISA for at least 12 months). It is the single best saving vehicle for a first-time buyer.
• High-interest savings and regular savers: many banks offer higher rates for regular monthly deposits. Combine a regular saver with your LISA.
• Gifted deposit: family can gift you some or all of your deposit. Your solicitor will need a signed letter from the giver confirming it's a gift, not a loan, plus ID and proof of funds for anti-money-laundering checks.

One thing to avoid: borrowing your deposit. Lenders will spot it in your bank statements and it often disqualifies you from a mortgage.

Two different numbers matter:

1. What you can borrow (the lender's view): most lenders will offer 4 to 4.5 times your annual income, sometimes more for higher earners or joint applications. A couple earning £35,000 and £30,000 (£65,000 combined) might borrow £260,000 to £290,000.
2. What you can afford to repay (your view): the monthly payment has to fit your actual budget, alongside bills, food, travel, and whatever you want to spend on living your life.

Lenders will also stress-test your application, asking "could you still afford this at a higher interest rate?" and checking your outgoings against your income.

Rule of thumb: your total housing costs (mortgage, council tax, utilities, insurance) should sit below 35% of your take-home pay. Above that and the house starts living in you, instead of the other way round.

Beyond the deposit, budget for:

• Solicitor or licensed conveyancer: £1,200 to £2,500 depending on complexity and location.
• Searches: £250 to £450 (local authority, environmental, drainage, water).
• Survey: £400 to £700 for a Level 2 HomeBuyer report; £800 to £1,500 or more for a Level 3 Building Survey on older homes.
• Mortgage arrangement fee: £0 to £1,500, often added to the loan.
• Mortgage valuation: sometimes free, sometimes £150 to £400.
• Stamp Duty Land Tax: see the stamp duty section below.
• Removal costs: £400 to £1,500 depending on distance and volume.
• Buildings insurance: required from the day you exchange contracts.
• First-month bills: water, gas, electric, broadband, council tax.

Many first-time buyers underestimate this pile by £3,000 to £5,000. Pad your budget.

Several government schemes still help first-time buyers. Availability and eligibility change, so always check current guidance before relying on any of them, but as of right now:

• Lifetime ISA (LISA): 25% government bonus on your savings, up to £1,000 a year. Property must be £450,000 or less.
• Shared Ownership: buy a share (25% to 75%) of a home and pay rent on the rest. Lower deposit requirement. Watch out for service charges, leasehold terms, and "staircasing" rules for increasing your share later.
• First Homes: selected new-build properties sold at 30% to 50% below market value to local first-time buyers, subject to income caps. Limited availability and area-specific.
• Mortgage Guarantee Scheme: government-backed scheme letting lenders offer 95% mortgages with smaller deposits. Not every lender participates.
• Help to Buy equity loans: closed to new applicants in England but variants continue in Wales and Scotland.

Talk to a mortgage adviser about which apply in your area and which suit your situation. Our team can put you in touch with one - book a chat via the mortgage advice page.

Stamp Duty Land Tax in England and Northern Ireland currently works like this for first-time buyers:

• Up to £300,000: no stamp duty.
• £300,001 to £500,000: 5% on the portion above £300,000. A £400,000 home pays £5,000 (5% of £100,000).
• Over £500,000: first-time buyer relief is lost. You pay standard residential rates on the whole amount.

To claim first-time buyer relief, you (and anyone buying with you) must never have owned residential property before, anywhere in the world, and the property must be your main residence.

Scotland uses LBTT, Wales uses LTT. Both have their own first-time buyer reliefs and thresholds. Our stamp duty calculator will give you the exact figure for your purchase.

A quick glossary of the terms you'll hear most:

AIP / Agreement in Principle

A lender's indication, based on a soft credit check and your declared income, of roughly how much they'd lend you. Not a binding offer. Useful for viewings.

LTV / Loan to Value

The size of your mortgage expressed as a percentage of the property value. 90% LTV means you're borrowing 90% and putting down 10%.

Fixed rate

Your interest rate is locked for a set period (2, 3, 5, or 10 years). Predictable payments, but exit penalties if you want out early.

Tracker

Your rate moves with the Bank of England base rate plus a margin. Cheaper if rates fall, painful if they rise.

SVR / Standard Variable Rate

The default rate your lender will drop you onto when your fixed or tracker deal ends. Almost always higher than any introductory deal. Never let your deal quietly roll onto SVR without shopping around first.

Arrangement fee

Fee charged by the lender for setting up the mortgage. Can be added to the loan or paid up front.

Early Repayment Charge (ERC)

Penalty for paying off the mortgage during a fixed-rate period. Usually 1% to 5% of the outstanding balance.

Stress test

Lenders check affordability against a higher interest rate to make sure you could still pay if rates rose.

Remortgage

Switching to a new deal (often with a new lender) when your current deal ends.

Most houses in England and Wales are sold freehold. You own the building and the land it sits on, forever.

Most flats, and some modern houses, are sold leasehold. You own the right to occupy the property for a set number of years (often 99, 125, or 999 originally), and pay ground rent and a service charge to the freeholder.

Things to check on a leasehold purchase:

• Remaining lease length: below 80 years and it becomes expensive to extend. Below 70 years and many lenders won't mortgage it.
• Ground rent: leases granted from 30 June 2022 onwards have zero ground rent. Older leases may have doubling clauses that become costly over time.
• Service charge: annual cost for maintaining communal areas, lifts, gardens. Ask for the last three years of accounts.
• Major works reserve fund: is there money set aside for the next roof, lift, or facade repair, or will you be hit with a £10,000 bill?

For a house: freehold is almost always preferable. For a flat: leasehold is standard, just read the detail carefully.

Beyond "do I like it":

• View twice, at different times of day. Morning light and evening traffic noise will tell you different stories.
• Look for damp: black spots, bubbling paint, a musty smell. Often hides behind furniture and in corners.
• Check window frames and sills: rotten wood is expensive to fix.
• Flush taps, flush the toilet, check the water pressure, especially in flats.
• Open every door and cupboard. Understand the layout and the storage.
• Stand in the garden and listen. Trains, pubs, main roads carry at certain hours.
• Ask about broadband speed. Rural homes can surprise you.
• Ask the boiler's age, the roof's age, whether the windows are double-glazed.

On a second viewing, bring a second opinion (parent, friend, partner), measure key rooms with a tape measure, and take photos.

When you've found it:

• Act fast. Good homes go quickly. Hesitation costs you.
• Be "proceedable". An AIP in hand and a solicitor lined up tells the seller "this person is serious". A first-time buyer with no chain is a very attractive position to be in.
• Offer through the agent, not the seller directly. The agent is legally obliged to pass every offer on.
• Start below asking, unless the market tells you otherwise. In a hot market, properties sell for and above asking. In a slower market, offers 5% to 10% below asking are normal.
• Don't show your hand. The agent will push for your "best and final". You can hold back without being rude.

If the seller takes the property off the market after accepting your offer, the listing status changes to "Sold STC" (Subject to Contract) or "Under Offer". Until contracts are exchanged, either party can walk away.

A brief outline, since our full Buyer Guide covers this step by step.

1. You instruct a solicitor.
2. Your mortgage application goes in.
3. The lender's valuation is done.
4. Your solicitor does searches, raises enquiries, and reviews the title.
5. Your survey is done.
6. You receive your formal mortgage offer.
7. You sign the contract.
8. Exchange of contracts. Legally binding, deposit transferred, completion date set.
9. Completion day. Funds move, keys are released, the home is yours.

Typical timeline: 8 to 16 weeks from offer accepted to keys, though it can be faster or (often) slower.

The ones we see most often:

• Overstretching at the top of their budget. Then interest rates rise, or a boiler dies, and they're stuck.
• Skipping the survey to save £600. A survey that finds a £4,000 problem has already paid for itself seven times over.
• Falling in love with a property on the first viewing and losing all negotiating discipline.
• Underestimating the ongoing costs of ownership: boiler service, roof, gutters, insurance, ground rent, service charges.
• Not getting an AIP before viewings. Sellers prefer buyers who clearly know they can afford the place.
• Putting every spare pound into the deposit and leaving nothing for furniture, solicitor, or the first month's bills.
• Buying in the wrong area because the house is perfect but the commute, schools, or amenities are not.

Congratulations, you're a homeowner. Now:

• Buildings insurance from completion day (or earlier if a mortgage lender required it at exchange).
• Contents insurance for your belongings.
• Council tax: register with the council for your new address.
• Utilities: take meter readings on day one. Transfer gas, electric, water, and broadband into your name.
• Redirect your post from your old address for 6 to 12 months.
• Update your address with bank, employer, DVLA, GP, dentist, pension, subscriptions.
• Set aside a maintenance fund. 1% of the property value per year is a reasonable starting point for repairs and upkeep.

Welcome home.