UK First-Time Buyer's Complete Guide 2025
Your step-by-step roadmap to buying your first home in the UK, from saving a deposit to getting the keys
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Table of Contents
1. First-Time Buyer Definition & Benefits
Buying your first home is one of the most significant financial decisions you'll ever make. In the UK, first-time buyers enjoy several advantages designed to help them onto the property ladder. Understanding what qualifies you as a first-time buyer and the benefits available is the essential first step.
Who Qualifies as a First-Time Buyer?
According to HMRC and most lenders, you're classified as a first-time buyer if you:
- Have never owned a residential property anywhere in the world
- Have never had a property transferred to you (inheritance doesn't count if you never owned it)
- Have never owned property through a company
Key Benefits for First-Time Buyers in 2025
| Benefit | Details | Potential Saving |
|---|---|---|
| Stamp Duty Relief | No stamp duty on first £425,000 | Up to £8,750 |
| Lifetime ISA Bonus | 25% government bonus on savings | Up to £33,000 |
| First Homes Scheme | 30-50% discount on new builds | £60,000-£150,000+ |
| Shared Ownership | Buy 25-75% share initially | Lower deposit required |
| Mortgage Guarantee Scheme | 95% LTV mortgages available | Smaller deposit needed |
2. How Much Can You Afford?
Before you start house hunting, it's crucial to understand how much you can realistically afford. Lenders will assess your affordability based on several factors.
Income Multiples
Most UK lenders offer mortgages of 4-4.5 times your annual income. Some may stretch to 5-5.5 times for high earners or professionals.
| Annual Income | 4x Multiple | 4.5x Multiple | 5x Multiple |
|---|---|---|---|
| £30,000 | £120,000 | £135,000 | £150,000 |
| £40,000 | £160,000 | £180,000 | £200,000 |
| £50,000 | £200,000 | £225,000 | £250,000 |
| £60,000 | £240,000 | £270,000 | £300,000 |
| £75,000 | £300,000 | £337,500 | £375,000 |
| £100,000 | £400,000 | £450,000 | £500,000 |
Affordability Assessment Factors
Lenders will also consider:
- Credit history: Any defaults, CCJs, or missed payments
- Existing debts: Credit cards, loans, car finance
- Monthly outgoings: Childcare, commuting costs, subscriptions
- Employment type: Permanent, contract, self-employed
- Deposit size: Larger deposits = better rates
- Stress testing: Can you afford payments if rates rise?
3. Saving for Your Deposit
The deposit is typically the biggest barrier for first-time buyers. While 5% deposits are available, a larger deposit means better mortgage rates and lower monthly payments.
Deposit Requirements by Property Price
| Property Price | 5% Deposit | 10% Deposit | 15% Deposit | 20% Deposit |
|---|---|---|---|---|
| £150,000 | £7,500 | £15,000 | £22,500 | £30,000 |
| £200,000 | £10,000 | £20,000 | £30,000 | £40,000 |
| £250,000 | £12,500 | £25,000 | £37,500 | £50,000 |
| £300,000 | £15,000 | £30,000 | £45,000 | £60,000 |
| £400,000 | £20,000 | £40,000 | £60,000 | £80,000 |
Smart Deposit Saving Strategies
- Set up a standing order: Automate savings on payday
- Use a savings tracker: Visualise progress to stay motivated
- Cut major expenses: Consider house-sharing, reducing car costs
- Boost income: Overtime, side hustles, selling unused items
- Bank of Mum and Dad: Over 50% of first-time buyers receive family help
- Employer schemes: Some employers offer deposit assistance programs
Deposit Sources Accepted by Lenders
- Personal savings (documented over 3+ months)
- Lifetime ISA or Help to Buy ISA
- Gifted deposit from family (requires gift letter)
- Inheritance (with documentation)
- Bonuses or redundancy payments
4. Government Schemes & Help
The UK government offers several schemes to help first-time buyers. Here's what's available in 2025:
First Homes Scheme
New-build homes sold at 30-50% discount. Must be first-time buyer, local connection may apply. Price cap after discount: £250,000 (£420,000 in London).
Shared Ownership
Buy 25-75% share, pay rent on remainder. Can "staircase" to full ownership. Minimum deposit: 5% of your share. Income cap: £80,000 (£90,000 London).
Lifetime ISA
Save up to £4,000/year, get 25% bonus from government. Property must be £450,000 or less. Must be held 12+ months before use.
Mortgage Guarantee Scheme
Government backs 95% LTV mortgages. Available through participating lenders. Property up to £600,000. Extended until June 2025.
Help to Buy Wales
Shared equity loan on new-builds in Wales. Up to 20% loan, interest-free for 5 years. Property up to £300,000.
Help to Buy Scotland
Affordable New Build scheme with up to 15% equity loan. Also First Home Fund for deposits up to £25,000.
Stamp Duty Relief for First-Time Buyers
First-time buyers pay no stamp duty on properties up to £425,000. For properties between £425,001 and £625,000, you pay 5% on the amount above £425,000.
| Property Price | First-Time Buyer | Standard Rate | Saving |
|---|---|---|---|
| £250,000 | £0 | £0 | £0 |
| £300,000 | £0 | £2,500 | £2,500 |
| £400,000 | £0 | £7,500 | £7,500 |
| £425,000 | £0 | £8,750 | £8,750 |
| £500,000 | £3,750 | £12,500 | £8,750 |
| £600,000 | £8,750 | £17,500 | £8,750 |
5. Understanding Mortgages
A mortgage is typically the largest financial commitment you'll make. Understanding the different types and how they work is essential.
Types of Mortgages
- Fixed Rate: Interest rate stays the same for a set period (typically 2, 3, 5, or 10 years). Provides payment certainty but may have early repayment charges.
- Variable/Tracker: Rate changes with Bank of England base rate. Can be cheaper initially but payments can increase.
- Standard Variable Rate (SVR): Lender's default rate after fixed period ends. Usually higher - always remortgage before this!
- Offset: Links savings account to mortgage, reducing interest charged. Good if you have substantial savings.
Current Mortgage Rates (January 2025)
| LTV | 2-Year Fixed | 5-Year Fixed | Tracker |
|---|---|---|---|
| 60% LTV | 4.15% | 4.05% | 4.75% |
| 75% LTV | 4.35% | 4.25% | 4.95% |
| 85% LTV | 4.65% | 4.55% | 5.25% |
| 90% LTV | 5.05% | 4.95% | 5.55% |
| 95% LTV | 5.45% | 5.35% | 5.95% |
*Rates are indicative and change daily. Always get personalised quotes.
Agreement in Principle (AIP)
Before house hunting, get an Agreement in Principle (also called Decision in Principle or Mortgage in Principle). This:
- Shows sellers you're serious and can afford the property
- Gives you a clear budget to work with
- Speeds up the buying process when you find a home
- Usually valid for 60-90 days
- Uses a soft credit check (doesn't affect your score)
6. Additional Costs to Budget For
Your deposit isn't the only cost. Budget for these additional expenses to avoid nasty surprises:
Upfront Costs
| Cost | Typical Range | Notes |
|---|---|---|
| Solicitor/Conveyancer | £1,000 - £2,000 | Legal fees for property transfer |
| Survey | £300 - £1,500 | Level 2 or 3 recommended |
| Mortgage Arrangement Fee | £0 - £2,000 | Some deals are fee-free |
| Mortgage Valuation | £0 - £500 | Often included free |
| Searches | £250 - £450 | Local authority, water, etc. |
| Land Registry | £100 - £300 | To register ownership |
| Stamp Duty | £0 (if under £425k) | First-time buyer relief |
Moving Day Costs
- Removal company: £400 - £1,500 depending on distance and volume
- Van hire (DIY): £50 - £200 per day
- Cleaning: £100 - £300 for professional end-of-tenancy clean
- Mail redirection: £40 - £120 (Royal Mail)
- New locks: £100 - £250 for security
Ongoing Monthly Costs
- Mortgage payments: Varies by amount and rate
- Buildings insurance: £150 - £400/year (required by lender)
- Contents insurance: £100 - £300/year (recommended)
- Council tax: £1,200 - £3,000+/year depending on band and area
- Utilities: £150 - £250/month for average home
- Maintenance fund: Budget 1% of property value annually
7. The Home Buying Process
The average time from offer accepted to completion in England and Wales is 12-16 weeks. Here's what happens at each stage:
Get Mortgage Agreement in Principle
Before viewing properties, get an AIP to confirm your budget and show sellers you're serious. Takes about 24-48 hours. Shop around or use a broker.
Find Your Property
View multiple properties, check the area at different times, research local amenities and transport. Don't rush - this is a major decision!
Make an Offer
Negotiate based on research of similar sales. Your offer can be below asking price. Once accepted verbally, it's "Sale Agreed" (but not yet legally binding).
Instruct Solicitor/Conveyancer
Appoint a solicitor to handle the legal work. They'll request the contract pack from seller's solicitor, conduct searches, and handle contracts.
Submit Full Mortgage Application
Apply formally with your chosen lender. They'll arrange a valuation of the property. Takes 2-4 weeks for mortgage offer.
Get a Survey
The lender's valuation isn't a survey! Book your own survey to check the property's condition. This could reveal issues to negotiate on price.
Exchange Contracts
Once all checks are done and you're satisfied, sign and exchange contracts. You'll pay your deposit (usually 10%). The sale is now legally binding!
Completion
Typically 1-2 weeks after exchange. Your solicitor transfers the remaining funds, you receive the keys, and the property is yours!
8. Expert Tips for First-Time Buyers
Before You Start
- Check your credit score: Sign up to Experian, Equifax, or TransUnion. Fix any errors before applying.
- Reduce debts: Pay down credit cards and loans to improve affordability calculations.
- Stop applying for credit: Each application leaves a mark. Avoid 6 months before mortgage application.
- Register to vote: Being on the electoral roll helps lenders verify your address.
- Save consistently: Lenders like to see regular saving habits over time.
During the Search
- Visit at different times: Check parking, noise, neighbourhood feel in evening and weekends.
- Research the area: Crime statistics, flood risk, planned developments, school ratings.
- Look beyond décor: Bad décor is easily fixed; structural issues aren't.
- Consider commute costs: A cheaper home further out might cost more overall.
- Check mobile signal: Test your network in the property - this matters!
Making an Offer
- Research sold prices: Use Land Registry and Rightmove to see what similar properties sold for.
- Consider time on market: Properties listed longer may accept lower offers.
- Be chain-free: As a first-time buyer, you're attractive to sellers - use this!
- Put offer in writing: Email the estate agent confirming your offer and position.
- Not getting a proper survey (the valuation isn't enough)
- Spending entire budget without contingency
- Ignoring service charges on leasehold properties
- Not reading the lease terms carefully
- Making emotional decisions under pressure
Final Checklist Before Exchange
- Survey completed and any issues resolved
- Mortgage offer received and valid
- All legal enquiries answered satisfactorily
- Buildings insurance arranged (required for exchange)
- Deposit funds ready and cleared in your account
- Completion date agreed with all parties
- Removal company booked (if using)
Useful Calculators for First-Time Buyers
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Calculate your monthly payments and total cost over your mortgage term.
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See how much stamp duty you'll pay with first-time buyer relief.
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Oliver Williams, CeMAP
Independent Mortgage Adviser
Oliver is a CeMAP-qualified independent mortgage adviser with 15+ years of experience helping first-time buyers and property investors navigate the UK housing market. He is registered with the FCA.