First-Time Buyer Guide UK: Costs, Deposits and Schemes

Property8 min readCalcStack Team

Let’s not pretend buying your first home in the UK is easy. The average first-time buyer deposit is around £53,000, and the average purchase price is over £230,000. Those numbers are daunting. But with the right planning, a decent understanding of the schemes available, and some realistic expectations, homeownership is still achievable. Here’s everything you need to know, step by step.

How Much Deposit Do You Really Need?

You can technically buy with just 5% deposit. On a £250,000 home, that’s £12,500. But there are very good reasons to aim higher:

  • 10% deposit gets you significantly better mortgage rates — easily £100+ less per month
  • 15–20% deposit unlocks the best deals and gives you a buffer against negative equity
  • Your deposit size determines your LTV ratio, which is the single biggest factor in what rate you’re offered

And don’t forget the other upfront costs: £3,000–£7,000 for solicitor, survey, mortgage fees, and moving. Budget for these separately — they catch a lot of first-timers off guard.

The Lifetime ISA (Your Best Friend)

The LISA is hands down the best savings tool for first-time buyers. Save up to £4,000/year and the government adds a 25% bonus — that’s £1,000 a year of free money. Over 4 years: £16,000 saved plus £4,000 in bonus. Who’s saying no to that?

The rules: you must be 18–39 to open one, the property can’t cost more than £450,000, and you need to hold it for at least 12 months before using it. Withdraw for anything other than a property or retirement and you lose the bonus plus a penalty. So don’t touch it.

Stamp Duty Relief

First-time buyers in England and Northern Ireland pay no stamp duty on the first £425,000 (on properties up to £625,000). That saves up to £8,750 compared to standard rates. Above £625,000, the relief disappears entirely and you pay from the first pound. Harsh cutoff.

Scotland gives first-timers a £175,000 nil-rate band for LBTT. Wales? No specific first-time buyer relief for LTT. Sorry, Cardiff.

Shared Ownership

Buy a share (usually 25–75%) and pay rent on the rest to a housing association. Your deposit is based on your share, not the full price. So 5% of a 25% share on a £300,000 home = just £3,750.

You can staircase (buy more shares) over time. But be aware of the ongoing rent, service charges, and restrictions. See our full shared ownership article for the honest pros and cons.

The Mortgage Process

From application to keys, typically 8–12 weeks:

  • Agreement in Principle (AIP): A preliminary offer based on income and credit check. Get this before viewing — most estate agents want to see it before taking offers seriously.
  • Full application: After your offer’s accepted. Payslips, bank statements, ID, proof of deposit.
  • Valuation: The lender checks the property is worth what you’re paying. This is for them, not you — get your own survey done separately.
  • Mortgage offer: The formal offer, typically valid 3–6 months.
  • Exchange and completion: Your solicitor handles the legal work. Exchange makes it legally binding. Completion is when you get the keys and finally stop holding your breath.

Costs Everyone Forgets About

  • Surveys: A HomeBuyer Report (£400–£700) or full building survey (£600–£1,500). Don’t skip this. The lender’s valuation is not a survey.
  • Mortgage fees: Arrangement fees of £999–£1,999 for the best fixed-rate deals
  • Buildings insurance: Required from exchange, not completion. Budget £150–£400/year.
  • Ongoing costs people don’t think about: Service charges, ground rent (leasehold), boiler breakdowns, higher energy bills than you had renting

Work Out Your Budget

Our free mortgage affordability calculator helps first-time buyers figure out their maximum budget, including deposit, mortgage amount, and total upfront costs. Better to know the number before you start falling in love with places you can’t afford.

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Frequently Asked Questions

How much deposit does a first-time buyer need?

Minimum 5% (£12,500 on a £250,000 home). But 10% is the sweet spot — it unlocks much better rates and could save you over £100/month on repayments. If you can stretch to 15%, even better.

Do first-time buyers pay stamp duty?

In England and Northern Ireland, no stamp duty on the first £425,000 (properties up to £625,000). Above £625,000, standard rates apply from pound one. In Scotland, you get a £175,000 nil-rate band.

What is a Lifetime ISA and should I get one?

A savings account where the government adds 25% on top (up to £1,000/year) on savings of up to £4,000/year. If you’re a first-time buyer aged 18–39 buying a property under £450,000? Yes. Open one yesterday. It’s free money.

How long does it take to buy a house?

From offer accepted to keys: typically 8–12 weeks. But it can stretch much longer if there’s a chain. And the full process from "I should start saving" to completion? That’s years, not months, for most people.

Is shared ownership worth it?

It can be a decent way onto the ladder with a smaller deposit. But you pay rent on the share you don’t own, and service charges add up. Run the total monthly costs against renting before you commit — for some people, it doesn’t stack up.

Should I get a fixed or variable rate mortgage?

Most first-time buyers go fixed (usually 2 or 5 years) for the certainty of knowing exactly what they’ll pay each month. With the base rate at 4.5% in early 2026, a 5-year fix gives good security without locking in for too long.

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