Buying your first home can be both exciting and daunting. There are many decisions to make, from the type of house and its location to understanding what’s affordable for you. Our handy guide outlines the top 5 costs you’ll need to consider, plus a bonus tip for ongoing expenses…

1) Deposit

Arguably the most well-known cost for any first-time buyer is the deposit. This is the amount you pay upfront towards your new home, with your mortgage covering the difference. For a mortgage in the UK, you’ll need to save at least a 5% deposit although if you can, it’s wise to save more as it gives you access to a wider range of mortgages with lower interest rates.

2) Mortgage

The size of deposit you’re able to save will determine the loan to value ratio (LTV) of your mortgage. For example, if you have a £20,000 deposit for a property worth £200,000, your deposit covers 10% of the value, therefore your LTV is 90%. For first-time buyers, 95% LTV mortgages are available with many high street lenders, but do your research as these can have higher interest rates and lower loan amounts. You can use a mortgage calculator to understand how much you can borrow.

Remember to always seek independent financial advice to understand the different types of mortgages available to you, plus any arrangement fees and whether the valuation fee (to check the property is worth the amount you wish to borrow) is included or additional. 

3) Stamp Duty

Stamp Duty is the tax you pay when buying a property, however the good news for all first-time buyers is there’s an exemption! If you’re buying your first home and its value is less than £425,000 then you won’t have to pay Stamp Duty. For properties between £425,001 and £625,000 in value, a 5% tax applies on the difference. The government has a helpful Stamp Duty calculator to work out any tax owed.

4) Conveyancing

Your conveyancing solicitor will handle the legal transfer of ownership of the property from the seller to the buyer, aka you! This includes drafting the contract, organising any surveys, checking mortgage terms, exchanging contracts, transferring funds and legally completing. Research by really moving suggests first-time buyers can expect to pay on average £1,432 in conveyancing fees in 2023.

5) Insurance

There are two types of insurance it’s sensible to take out when buying your first home. The first is buildings and contents, which is usually bought as a joint policy although can be sourced separately. This covers repairs or replacements to your home and belongings in the event of extreme weather, burglary or fire/water damage, and it’s compulsory if you have a mortgage.

The other is life insurance, which acts as a mortgage protection for your family, meaning if the worst happens, it will pay a lump sum to help them clear the mortgage. As with any insurance policy, shop around for the right level of cover.

So there you have it, our top five budgeting tips to get you firmly on your way to home ownership. But we did promise a bonus for your full financial checklist, so…

6) Moving Day & Monthly Bills

Other costs to bear in mind are any removal services you might use to simplify your moving day, and a review of your likely monthly outgoings e.g. council tax, energy, water, mobile phone and broadband bills. Don’t forget to include any luxuries such as TV/streaming packages or gym membership too!

For more first-time buyer advice, including our exclusive benefits and initiatives to help you move into your dream home sooner than you think, please ask your sales advisor or email us at info@deanfieldhomes.co.uk.