Buying your first home is one of the biggest financial decisions of your life, and the process can feel overwhelming. This plain-English guide walks you through every step so you know exactly what to expect.
- How much can you borrow?
- Government schemes for first-time buyers
- The costs beyond the deposit
- Choosing a mortgage
How much can you borrow?
Most mortgage lenders will lend up to 4.5 times your annual salary, though some lenders will go higher in certain circumstances. With a salary of £35,000 you could typically borrow up to £157,500. Joint applications use the combined salary of both applicants.
The size of your deposit also affects how much you can borrow and, critically, the interest rate you will be offered. A 10% deposit is typically the minimum required, though larger deposits of 15% to 25% unlock significantly better rates.
Government schemes for first-time buyers
The Mortgage Guarantee Scheme allows buyers to purchase with just a 5% deposit on properties up to £600,000, with the government guaranteeing part of the mortgage to reduce the lender's risk.
Shared Ownership allows you to buy a share of a property — typically between 10% and 75% — and pay rent on the remainder. You can buy additional shares over time in a process called staircasing.
The Lifetime ISA provides a 25% government bonus on savings of up to £4,000 per year, specifically for first-time buyers purchasing a property worth up to £450,000.
The costs beyond the deposit
First-time buyers often underestimate the additional costs involved in buying a home. These include solicitor or conveyancer fees of around £1,500 to £3,000, a mortgage arrangement fee of up to £1,000, survey costs of £400 to £1,500, and removal costs.
First-time buyers in England pay no stamp duty on the first £425,000 of a property's value, which provides significant savings compared to home movers.
Choosing a mortgage
Always use a whole-of-market mortgage broker rather than going directly to a bank. A broker will find the best available deal across hundreds of lenders and guide you through the application process.
Bottom line
Buying your first home requires careful planning and a clear understanding of all the costs involved. Start saving as early as possible, use a Lifetime ISA for the government bonus, speak to a whole-of-market mortgage broker, and take your time to find the right property at the right price.