First-Time Buyer Guide: Deposits, Costs & Mortgage Tips

The Complete First-Time Buyer Guide for 2025/26

Buying your first home is exciting and daunting in equal measure. This guide takes you through every stage — from saving your deposit to picking up the keys — with real UK figures for 2025/26.

How Much Deposit Do You Need?

The deposit is the single biggest barrier for most first-time buyers. The more you put down, the better your mortgage rate:

• 5% deposit — The minimum accepted by most lenders. Expect rates around 5.5–6.5%. Limited product choice.
• 10% deposit — A significant improvement in rates, typically 4.5–5.5%. Many more products available.
• 15%+ deposit — Access to the most competitive rates, often 4.0–5.0%. Lenders view you as lower risk.

On a £250,000 property, that means saving £12,500 (5%), £25,000 (10%), or £37,500 (15%).

Total Costs Breakdown

The deposit is not your only cost. Budget for all of the following:

| Cost | Typical Amount | |---|---| | Deposit (10% on £250k) | £25,000 | | Solicitor / conveyancer | £1,200–£2,000 | | Survey (Homebuyer Report) | £400–£700 | | Mortgage arrangement fee | £0–£2,000 | | Stamp Duty (FTB relief) | £0 on first £300,000 | | Removal costs | £300–£1,500 | | Furniture and essentials | £2,000–£5,000 | | Buildings insurance (required) | £150–£400/year | | Approximate total | £29,000–£36,000 |

Always keep a cash buffer of at least £2,000–£3,000 for unexpected costs after moving.

Government Schemes for First-Time Buyers

Lifetime ISA (LISA) — Save up to £4,000 per year and receive a 25% government bonus (up to £1,000 per year). Must be aged 18–39 to open. Funds can be used to buy a first home worth up to £450,000 after 12 months. Withdrawing for other purposes incurs a 25% penalty (meaning you lose some of your own money too).

Shared Ownership — Buy a share of a property (25–75%) and pay rent on the remainder. Available on new builds and some resales through housing associations. You can "staircase" (buy more shares) over time. Mortgage is only needed for your share.

First Homes — New-build properties sold at a minimum 30% discount to market value. The discount is passed on to future buyers. Eligibility criteria include a household income below £80,000 (£90,000 in London) and being a first-time buyer.

Help to Build — Equity loan scheme for self-build and custom-build projects. Provides an equity loan of 5–20% (40% in London) to supplement your deposit and mortgage.

Mortgage Types for First-Time Buyers

Most FTBs choose a fixed-rate mortgage for payment certainty. Two-year and five-year fixes are most popular. Consider:

• 2-year fix — Lower initial rate, but you remortgage sooner and pay fees again
• 5-year fix — Slightly higher rate, but 5 years of certainty and fewer fees over time
• 10-year fix — Maximum stability, rates typically 0.5–1% higher than 5-year fixes

Fixed rates are especially sensible for first-time buyers on tight budgets who cannot absorb payment increases.

The Buying Process — 12 Steps

1. Check your credit score — Review your report on Experian, Equifax, and TransUnion. Fix any errors. Register on the electoral roll.
2. Save your deposit — Use a LISA for the government bonus. Build an emergency fund alongside.
3. Get an Agreement in Principle (AIP) — Shows sellers and agents you are a serious buyer.
4. Research areas and set criteria — Schools, transport links, flood risk, future development plans.
5. View properties — See at least 8–10 before making an offer. Visit at different times of day.
6. Make an offer — Research comparable sold prices on the Land Registry. Offers below asking price are normal.
7. Instruct a solicitor — Get quotes from 3+ conveyancers. Check reviews and accreditation.
8. Submit your full mortgage application — Provide all documents promptly to avoid delays.
9. Arrange a survey — Do not skip this. A survey can reveal issues that save you thousands or give you negotiating leverage.
10. Receive your mortgage offer — Review the terms carefully.
11. Exchange contracts — You are now legally committed. Pay your deposit.
12. Complete and move in — Completion typically happens 1–4 weeks after exchange. Collect your keys.

Stamp Duty Relief for First-Time Buyers

From April 2025, first-time buyers pay:

• 0% on the first £300,000
• 5% on the portion from £300,001 to £500,000
• Standard rates apply if the property exceeds £500,000

Example at £425,000: You pay 5% on £125,000 = £6,250 (saving £6,250 versus standard rates).

Surveys Explained

Level 1 — Valuation: A brief assessment for the lender's benefit. Does not protect you. Often free.

Level 2 — HomeBuyer Report: A mid-level inspection covering the condition of visible elements, significant defects, damp, and a market valuation. Suitable for standard properties in reasonable condition. Cost: £400–£700.

Level 3 — Building Survey: A comprehensive, detailed investigation of the property's structure and condition. Recommended for older homes (pre-1930), unusual construction, or properties you plan to renovate. Cost: £600–£1,500.

Exchange vs Completion

Exchange is when contracts are swapped and both parties are legally bound. You pay your deposit (held by the seller's solicitor). Pulling out after exchange means losing your deposit and potentially being sued for breach of contract.

Completion is when the money transfers, ownership changes, and you get the keys. It is typically 1–4 weeks after exchange but can be the same day.

Tips for House Viewings

• Visit at different times (morning, evening, weekend) to assess noise, traffic, and parking
• Check water pressure by running taps
• Look for damp patches, cracks in walls, and fresh paint that may be hiding problems
• Open windows and doors to check they work smoothly
• Ask about the boiler age, roof condition, and when the electrics were last updated
• Check mobile phone signal throughout the house
• Walk around the local area — are there amenities you need?

Common First-Time Buyer Mistakes

• Not getting a survey — The valuation is not a survey. A £500 survey can save you £50,000 in hidden repair costs.
• Stretching to the absolute maximum — Leave room for rate rises and unexpected expenses.
• Falling in love too quickly — Stay objective. There will always be another property.
• Underestimating additional costs — Solicitor fees, surveys, moving costs, and furnishing add up fast.
• Not using a LISA — Free money from the government. Open one now even if you are not ready to buy yet.
• Choosing the cheapest solicitor — A slow or incompetent conveyancer can cause chains to collapse.

Typical Timeline

| Stage | Duration | |---|---| | Saving a deposit | 1–5 years | | Searching and viewing | 1–6 months | | Offer to mortgage offer | 2–6 weeks | | Mortgage offer to exchange | 4–12 weeks | | Exchange to completion | 1–4 weeks | | Total (offer to keys) | 8–16 weeks typically |

Use our Mortgage Calculator and Stamp Duty Calculator to plan your budget.

Understanding the Local Property Market

Before making offers, research the local market thoroughly:

Sold prices: Check the Land Registry Price Paid data (available free on GOV.UK) to see what similar properties have actually sold for. Rightmove and Zoopla also show sold price history.

Price trends: Look at whether prices in your target area are rising, stable, or falling. Areas with new transport links can see significant increases.

Time on market: If properties are sitting unsold for months, sellers may accept lower offers. If properties sell within days, you may need to offer at or above asking price.

Choosing the Right Solicitor

Your solicitor is critical to a smooth purchase. Get at least three quotes (expect £1,000–£2,000 plus disbursements), check reviews on Google and Trustpilot, ask about their current caseload, and look for the Law Society Conveyancing Quality Scheme (CQS) mark.

Disbursements typically include local authority searches (£100–£300), environmental search (£30–£50), water and drainage search (£30–£60), and Land Registry fees (£95–£910 depending on price).

Managing Your Mortgage After Completion

Make overpayments — Most fixed-rate deals allow 10% overpayment per year. Overpaying £100/month on a £200,000 mortgage at 5% saves approximately £17,000 in interest and clears the mortgage 4 years early.

Build an emergency fund of 3–6 months of mortgage payments plus essential bills.

Review annually and set a reminder 3 months before your fixed rate expires to avoid falling onto the SVR.

Protect your income with life insurance, critical illness cover, or income protection insurance.

Energy Efficiency and Running Costs

New homeowners are often surprised by running costs:

• Energy bills: Check the EPC rating. An E-rated home can cost £1,000+ more per year to heat than a C-rated home.
• Council tax: Ranges from £1,200–£4,000+ per year depending on area and band.
• Service charges: Leasehold flats typically have annual charges of £1,000–£3,000.
• Maintenance: Budget 1–2% of the property value per year for repairs.
• Insurance: Buildings insurance is required by your lender. Expect £300–£600/year for buildings and contents combined.

New Build vs Existing Property

New build advantages: 10-year NHBC warranty, energy efficient, no chain, modern layout, developer incentives.

New build disadvantages: Premium pricing (typically 10–20% above comparable existing homes), potential snagging issues, smaller rooms, limited negotiation on price.

Existing property advantages: Often larger rooms, established gardens, character, more negotiable pricing.

Existing property disadvantages: Potential for unexpected repairs, may need updating, higher energy costs, chain risk.