First-Time Buyer Guide UK 2025: Step-by-Step from Saving to Moving In
Buying your first home in the UK is one of the most significant financial undertakings of your lifetime. The process involves more steps, more professionals, and more decisions than most first-time buyers expect — and the costs go well beyond the deposit. The average age of a first-time buyer in the UK is now 33, and the average deposit stands at approximately £61,000 according to Halifax data. In London, both figures are considerably higher.
This guide walks you through every stage of the process, from the very first decision to buy through to collecting your keys, with practical advice on government schemes, costs, mortgages, surveys, and the legal process in between.
Maximum government bonus available through the Lifetime ISA for first-time buyers saving over 5 years at £4,000/year
The 15-Step Home Buying Process
- Decide to buy & assess your finances. Review your income, outgoings, debts, and credit score. Download your free credit report from Experian, Equifax or TransUnion. Check for errors and begin clearing debts if possible. Decide whether you are buying alone or with a partner.
- Set your budget. Calculate how much deposit you can save, how much you can borrow (typically 4–4.5x your gross income), and what monthly repayments you can comfortably afford. Use our Mortgage Calculator to model scenarios.
- Open a Lifetime ISA (LISA). If you are 18–39 and have not opened one yet, do it now. The government adds 25% to contributions (up to £1,000/year) on savings toward a first home. The 12-month minimum holding period means the earlier you open one, the sooner you can use it.
- Save your deposit. Aim for at least 10% of your target purchase price for access to better mortgage rates. 5% is possible via the Mortgage Guarantee Scheme, but rates are higher. Consider all savings vehicles: LISA (£4,000/year, 25% bonus), cash ISA (tax-free interest), and regular saver accounts.
- Research the market. Use Rightmove, Zoopla, and OnTheMarket to understand what properties are available in your target area at your price range. Research local amenities, schools, transport links, and council tax bands. Compare areas inside vs outside London for affordability.
- Get a Mortgage in Principle (MIP). Before viewing properties seriously, obtain a MIP from a lender or broker. This shows sellers and agents you are a credible buyer. It involves a soft credit check and typically takes 24–48 hours. Valid for 30–90 days.
- Instruct a solicitor (conveyancer). Appoint a solicitor or licensed conveyancer before making an offer — it speeds up the process once your offer is accepted. Get quotes from 3 firms. Costs typically range from £1,000 to £2,000 including disbursements.
- View properties. Visit at different times of day and in different weather if possible. Check for damp, cracks, roof condition, window state, boiler age, and broadband availability. Ask about service charge, ground rent (leasehold), and length of lease remaining.
- Make an offer. Submit your offer through the estate agent. Include your MIP and note that you have a solicitor in place. If rejected, negotiate. Offers are not legally binding in England and Wales until exchange of contracts.
- Apply for your mortgage. Once your offer is accepted, submit a full mortgage application with your chosen lender or broker. Gather documents: 3 months payslips, 3 months bank statements, P60, proof of ID and address, and deposit source evidence.
- Commission a survey. Do not rely solely on the lender's valuation. Choose a Level 2 Homebuyer Report for most properties or a Level 3 Building Survey for older or unusual properties. A survey can reveal issues that allow you to renegotiate the price.
- Conveyancing process. Your solicitor conducts local authority searches (planning, drainage), reviews title deeds, checks leasehold documents, and raises enquiries with the seller's solicitor. This phase typically takes 8–12 weeks.
- Receive your formal mortgage offer. Once the lender completes their valuation and underwriting, they issue a formal offer. Review all terms carefully. Your solicitor will check the offer against your purchase contract.
- Exchange contracts. Both parties sign identical contracts. You pay your deposit (typically 10% of purchase price) to your solicitor, who holds it until completion. The sale is now legally binding — if you pull out, you lose your deposit.
- Completion and moving in. On completion day, the remaining funds transfer from your lender to the seller via the solicitors. You receive the keys. Your solicitor registers the property in your name at HMRC and the Land Registry and pays any SDLT due.
Government Schemes for First-Time Buyers in 2025
Several government schemes are available to help first-time buyers get onto the property ladder. Understanding which applies to your situation can make a significant difference to your deposit requirements and affordability.
Lifetime ISA (LISA) — Best Starting Point
Open to those aged 18–39. Save up to £4,000 per year. Government adds 25% bonus (up to £1,000 per year). Use for a first home worth up to £450,000 after holding the account for at least 12 months. Both buyers in a couple can each have a LISA. Total bonus available over 5 years of maximum saving: £5,000 per person, £10,000 for a couple.
First Homes Scheme — 30–50% Discount
A government scheme that offers qualifying first-time buyers properties at a discount of 30%, 40%, or 50% below market value. Available on new-build homes from participating developers. Eligibility criteria include being a first-time buyer, meeting income caps (typically £80,000/year, or £90,000 in London), and the discount is retained in perpetuity — when you sell, the buyer also receives the discounted price. This scheme helps buyers in high-cost areas significantly.
Mortgage Guarantee Scheme — 5% Deposit
The government guarantees part of the mortgage to the lender, enabling them to offer 95% LTV (5% deposit) mortgages with reduced risk. Available on properties up to £600,000. Major lenders including Halifax, Lloyds, Barclays and HSBC participate. Note that 95% LTV mortgages carry higher interest rates than 10% or 15% deposit products — weigh this cost carefully over your initial fixed period.
Shared Ownership — Buy a Share, Pay Rent on the Rest
Purchase a share (typically 10%–75%) of a property from a housing association and pay rent on the remaining share. You only need a mortgage (and deposit) for the share you are buying. Over time you can "staircase" by buying additional shares. Available on properties up to £250,000 (£300,000 in London). Eligibility requires household income below £80,000 (£90,000 in London). Note ongoing service charges and ground rent (as a leasehold property) and ensure the rent on the housing association's share is accounted for in your affordability calculations.
Help to Buy ISA (Closed to New Applicants Since 2019)
No new Help to Buy ISAs can be opened, but existing holders can continue saving until November 2029 and claim the government bonus on completions until November 2030. The government adds 25% to savings (up to a maximum bonus of £3,000 on £12,000 of savings). The property must cost no more than £250,000 (£450,000 in London). If you have an existing account, continue maximising it. For new savers, the Lifetime ISA is the better option.
Stamp Duty Land Tax (SDLT) for First-Time Buyers
Stamp Duty Land Tax applies to all property purchases in England and Northern Ireland above the threshold. First-time buyers benefit from a specific relief. Note that Scotland uses Land and Buildings Transaction Tax (LBTT) and Wales uses Land Transaction Tax (LTT) with different rules.
| Purchase Price (England & NI) | Standard SDLT Rate | First-Time Buyer Rate (2025) |
|---|---|---|
| Up to £250,000 | 0% | 0% |
| £250,001 – £300,000 | 5% | 0% (FTB relief) |
| £300,001 – £500,000 | 5% | 5% |
| £500,001 – £925,000 | 5% | 5% (no FTB relief above £500k) |
| Above £925,000 | 10% | 10% |
How Much Can You Borrow? Affordability Explained
UK mortgage lenders assess affordability in two ways: income multiples and stress testing. Understanding both helps you plan your budget accurately.
Income multiples: Most lenders apply a maximum of 4 to 4.5 times your gross annual income. Joint applicants combine both incomes. Some lenders — particularly for professionals such as doctors, solicitors, dentists, and accountants — will lend up to 5x or 5.5x income.
| Gross Salary (Individual) | Maximum at 4x | Maximum at 4.5x | Maximum at 5x |
|---|---|---|---|
| £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 |
Stress testing: Since the Mortgage Market Review (2014), lenders must verify you can afford repayments if rates rose by 3% above the initial rate. This "stress rate" calculation often produces a lower borrowing limit than the income multiple alone. For example, being offered a 4.5% fixed rate, the lender tests affordability at 7.5%.
Deposit Requirements and Typical Costs
| Cost Item | Typical Range | Notes |
|---|---|---|
| Deposit (5%) | Varies by price | Minimum; rates are significantly higher than at 10%+ |
| Deposit (10%) | Varies by price | Unlocks much better rate tiers |
| Stamp Duty | £0 – varies | Often £0 for FTBs under £300k; calculate carefully above |
| Solicitor / conveyancing | £1,000 – £2,000 | Including searches, Land Registry fees, disbursements |
| Survey (Level 2) | £400 – £600 | Highly recommended; Level 3 for older properties £600–£1,500 |
| Mortgage arrangement fee | £0 – £1,999 | Some deals are fee-free; can be added to mortgage |
| Mortgage broker fee | £0 – £500 | Many brokers are fee-free (paid by lender); some charge |
| Removal costs | £500 – £2,000 | Depends on volume of belongings and distance |
| Total additional costs | £3,000 – £8,000+ | Budget conservatively; costs can exceed this in London |
Survey Types Explained
Many first-time buyers skip surveys to save money — this is a false economy on an asset worth hundreds of thousands of pounds. Here are the three RICS survey levels:
- Level 1 – Condition Report (approx. £300–£400): Basic traffic-light condition assessment. Suitable only for new-build properties or very modern properties in excellent condition. Does not include a market valuation.
- Level 2 – Homebuyer Survey (approx. £400–£600): The most widely used survey for standard residential properties. Covers condition, identifies significant defects, includes a market valuation, and provides advice on maintenance. Recommended for properties built after 1900 in apparent good condition.
- Level 3 – Building Survey (approx. £600–£1,500): The most comprehensive option. Provides a full structural inspection, detailed analysis of defects, and recommendations. Essential for properties built before 1900, listed buildings, thatched roofs, timber frames, or any property where you have concerns about condition or intend to carry out major works.
Exchange vs Completion: What Happens When
Exchange of contracts is the moment the sale becomes legally binding. Both parties (via their solicitors) exchange identical signed contracts. At this point you pay your exchange deposit (typically 10% of the purchase price, though it can be negotiated). If you pull out after exchange, you forfeit your deposit. If the seller pulls out, they can be sued for breach of contract.
Completion is when ownership transfers. Your solicitor sends the balance of funds to the seller's solicitor, the seller vacates the property, and you receive the keys. This typically happens 1–4 weeks after exchange, though both parties can agree on any date. Completion day is when your mortgage begins and your monthly payments start.
London vs Rest of UK: First-Time Buyer Differences
- Average first-time buyer property price in London: approximately £500,000–£550,000 (2025); outside London: approximately £220,000–£260,000.
- Average deposit in London: approximately £130,000–£150,000; outside London: approximately £35,000–£60,000.
- SDLT relief threshold (£300,000) covers most purchases outside London but is quickly exceeded in the capital.
- Income multiples required for London purchases typically demand dual-income households or professional mortgages (5x+).
- Shared Ownership and First Homes are proportionally more important in London due to price levels.
Frequently Asked Questions
The minimum deposit in the UK is 5% of the purchase price under the Mortgage Guarantee Scheme. However, 10% unlocks significantly better interest rates, and 15–20% gives you access to the most competitive deals. The average first-time buyer deposit in the UK was approximately £61,000 according to Halifax data, representing around 20% of the average purchase price. In London, average deposits are substantially higher.
First-time buyers benefit from Stamp Duty Land Tax relief in England and Northern Ireland. As of 2025, first-time buyers pay 0% on the first £300,000, 5% on the portion between £300,001 and £500,000, and no relief applies for properties above £500,000. In Scotland (LBTT) and Wales (LTT) separate land taxes apply with different thresholds. Always verify current rates with HMRC or your solicitor.
The Lifetime ISA allows adults aged 18–39 to save up to £4,000 per year toward a first home or retirement. The government adds a 25% bonus, worth up to £1,000 per year. To use a LISA for a first home purchase, the property must cost £450,000 or less and you must have held the account for at least 12 months. Both buyers in a couple can each have a LISA. If you withdraw for any other reason before age 60, you lose the bonus plus pay a 6.25% penalty on your own savings.
A Mortgage in Principle (MIP), also called an Agreement in Principle (AIP), is a conditional written statement from a lender indicating how much they would be willing to lend you based on an initial assessment of your income, outgoings, and credit score. It demonstrates to estate agents and sellers that you are a serious, credible buyer. A MIP typically involves only a soft credit check and is valid for 30–90 days.
Exchange is the point at which both parties sign and exchange contracts, making the sale legally binding. You pay your deposit (typically 10%) at this stage — if you then pull out, you lose it. Completion is when the remaining funds transfer and you receive the keys. The period between exchange and completion is typically 1–4 weeks but can be arranged to suit both parties.
Most UK lenders use an income multiple of 4 to 4.5 times your gross annual salary. On a £40,000 salary, that is £160,000–£180,000. Some lenders offer 5x or 5.5x income multiples for professionals. Joint applicants combine both incomes. All lenders also stress-test your ability to afford the mortgage if rates rose by 3%, so your actual borrowing limit may be lower than the headline multiple suggests.
There are three main RICS survey levels. A Level 1 Condition Report (around £300–£400) suits new-build or modern properties. A Level 2 Homebuyer Report (around £400–£600) is the most common choice for standard properties, providing a detailed condition assessment and market valuation. A Level 3 Building Survey (around £600–£1,500) is a full structural survey recommended for older properties, listed buildings, or any home where you have concerns about condition. Never skip a survey.