The short version
Target a 10% deposit on a home in the £200,000–£350,000 band. Save inside a Lifetime ISA if you are aged 18 to 39 — the state pays in £1,000 for every £4,000 you contribute, up to age 50. When you find a home, budget for Stamp Duty Land Tax, which is nil for first-time buyers up to £300,000 and is charged at 5% on the slice from £300,001 to £500,000. Then borrow no more than you could still repay at a rate 2 percentage points above the one you have been offered; Bank of England rules keep lending at 4.5 times income or more to 15% of new mortgages across the market. The tax is due within 14 days of completion. Keep about £3,000 in cash for the weeks after you move in.
The hardest thing about buying a first home in the UK is not, on any objective measure, the buying. It is the waiting. Every stage of the process has a specific, knowable set of numbers attached to it — a deposit target, a bonus ceiling, a tax band, a loan multiple, a completion window — and each of those numbers is written down somewhere on a government website. What is rarely written down is the order in which a first-time buyer should meet them, and that is what makes the first year of saving feel like shouting into fog.
This guide tries to fix that. It walks through the five stages a typical English first-time buyer will pass through, in the order they actually occur, with the exact 2026/27 numbers that apply at each one and a link to the calculator that does the arithmetic. It is written for a PAYE employee buying a single freehold or leasehold property in England or Northern Ireland; Scottish Land & Buildings Transaction Tax and Welsh Land Transaction Tax are flagged but not covered in detail.
01The deposit
A deposit is the slice of the purchase price you fund yourself. Lenders speak in loan-to-value (LTV) ratios: a 90% LTV mortgage means the bank lends 90% and you provide the other 10%. Most mainstream lending tops out at 95% LTV — a 5% deposit — and the cheaper rates usually appear as LTV drops to 90%, 85% and 75% or lower. The largest single lever on your monthly payment over the next thirty years is not what interest rate you chase; it is what LTV band you enter at.
Ten percent is the pragmatic target for most first-time buyers. Five percent is possible but expensive; twenty-five percent is the point at which rate savings level off. For a £280,000 home, that is £28,000 saved.
How long does saving £28,000 take? That depends only on monthly surplus and interest. Saving £600 a month in an account paying 4% gross, with interest added monthly, you reach it in about 44 months (3 years 8 months). Saving £1,200 a month, it takes about 23 months. Interest above your Personal Savings Allowance is taxable, and rates move, so treat these as illustrations. The calculator below will show you the exact curve.
Compound Interest CalculatorHow a monthly direct debit turns into a deposit, with interest compounded monthly.Where to keep the deposit
A deposit is short-horizon money. The rule of thumb is that any money you need inside five years should not be in the stock market — not because the market is likely to crash, but because the consequences of a crash landing inside your completion window are asymmetric and horrible. Cash savings accounts, premium bonds and cash ISAs are the three reasonable vehicles. Fixed-rate bonds pay a little more but lock the money up, which can clash with the moment you actually need it.
The exception to the cash rule is the Lifetime ISA, which deserves a section of its own because of its 25% bonus. A cash Lifetime ISA keeps the deposit in cash; a stocks and shares Lifetime ISA can fall in value just before you buy, like any other investment.
02The Lifetime ISA
The Lifetime ISA, universally abbreviated to LISA, is a small, specific, and unusually generous government scheme. You must be 18 or over but under 40 to open one. You can then save up to £4,000 per tax year into it, and the government adds a 25% bonus — up to £1,000 a year. You can keep paying in, and earning the bonus, until you turn 50. The £4,000 counts towards your £20,000 overall ISA allowance.
The money, plus the bonus, plus any growth, can be withdrawn without a charge in three situations: buying your first home (priced up to £450,000), reaching age 60, or being terminally ill with less than 12 months to live. Any other withdrawal triggers a 25% government withdrawal charge on the full amount withdrawn. Because that charge takes back more than the bonus added, you end up slightly worse off than if you had never put the money in: pay in £800, receive £200 of bonus, withdraw the £1,000 and you get £750 back. The LISA is, in other words, a one-way door with a very good reward and a sharp exit charge.
For a first-time buyer who opens a LISA at 25 and contributes the maximum £4,000 every year for five years, the government will have added £5,000 by the time a purchase is made. That is £25,000 before any interest; at 4% a year the pot would be roughly £27,000 to £28,000 after five years, close to a 10% deposit on a £280,000 home. The bonus alone is worth almost 2 percentage points of deposit on that home, as long as the purchase meets the conditions below.
Lifetime ISA CalculatorYour contributions + bonuses + growth, year by year, to the day you buy.The four hard edges of a LISA. First, you must buy at least twelve months after your first payment into the account; withdraw for a purchase sooner and the 25% charge applies. Second, the property must cost £450,000 or less — a ceiling that has not moved since the LISA launched in 2017. Third, you must buy with a mortgage, through a conveyancer or solicitor, who receives the money directly from the ISA provider. Fourth, you must be a first-time buyer: if you have ever owned a home, including one you inherited, a withdrawal counts as unauthorised and the charge applies. Open the LISA at least a year before you plan to buy.
LISA versus Help to Buy ISA
The older Help to Buy ISA closed to new accounts on 30 November 2019, but many first-time buyers still hold one. Existing holders can keep paying in until 30 November 2029 and must claim the bonus by 1 December 2030. Its bonus is also 25%, but capped at £3,000 in total, and the home must cost £250,000 or less (£450,000 in London). You can hold both accounts, but you can only use the bonus from one of them to buy your first home; you can move Help to Buy ISA money into a LISA. With a £1,000-a-year cap and a £450,000 price limit everywhere, the LISA usually comes out ahead if you have time to use it. If you already hold a Help to Buy ISA and are close to purchase, check which bonus is bigger for you.
03Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is a tax on the buyer, paid within fourteen days of completion. Your solicitor files the return and sends the money to HMRC as part of the completion wire. You will never write a cheque to HMRC yourself — but it comes out of your deposit or your bank balance on day one, not absorbed into the mortgage, and underestimating it is an easy budgeting mistake to make.
For first-time buyers in England and Northern Ireland, the 2026/27 SDLT schedule is:
| Slice of purchase price | Rate (first-time buyer) |
|---|---|
| £0 – £300,000 | 0% |
| £300,001 – £500,000 | 5% |
| Over £500,000 | First-time buyer relief lost — standard rates apply on the whole price |
The cliff edge at £500,000 is severe. A first-time buyer purchasing a £499,999 home pays £9,999.95 in SDLT. At £500,001 the relief is lost and standard rates apply to the whole price: nothing on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on the remaining £250,001 (£12,500.05), so £15,000.05 — about £5,000 more for £2 more. Agreeing £505,000 for a home that would sell at £495,000 costs even more: £15,250 of SDLT instead of £9,750.
A worked example. On a £340,000 home — a reasonable target for a first-time buyer in a mid-tier town — the SDLT due is 5% of the slice from £300,001 to £340,000, which is 5% × £40,000 = £2,000. Due in full on completion.
Stamp Duty CalculatorWorks SDLT across first-time buyer, standard, additional-dwelling and non-resident bands.Scotland and Wales
SDLT applies only in England and Northern Ireland. Scotland has its own Land & Buildings Transaction Tax (LBTT): the nil-rate band is £145,000, and first-time buyer relief raises it to £175,000. Wales has Land Transaction Tax (LTT), which has no first-time buyer relief but starts at £225,000 for everyone. If you are buying in Scotland or Wales, do not rely on the English numbers above; our SDLT calculator has devolved modes, and the Revenue Scotland and Welsh Revenue Authority websites are the ground truth.
04The mortgage
The mortgage is where the largest numbers appear and where the most emotional mistakes are made. A lender has exactly one interest at this stage: that you can afford the monthly payment under a stress-tested rate. You, by contrast, have two interests that are quietly in tension: to be lent as much as possible so you can buy the home you want, and to be lent no more than you can comfortably repay if your circumstances change.
How much you will be offered
Lenders look at your income multiple and at affordability. On the multiple, the Bank of England's Financial Policy Committee limits mortgages at 4.5 times income or more to 15% of new lending across the market (since July 2025 individual lenders have been allowed to go above 15% as long as the market as a whole stays within it, under interim measures the regulators expect to make permanent in the second half of 2026), so most borrowers are lent less than 4.5 times their income. For a couple earning £45,000 and £35,000, 4 times their combined £80,000 is £320,000 and 4.5 times is £360,000. On affordability, the lender checks your committed outgoings (childcare, loans, credit cards) and whether you could still pay if interest rates rose.
How much you should borrow
The mortgage a lender offers is an upper bound, not a recommendation. A sensible self-test is to take the monthly payment at your offered rate, add two percentage points to the rate, recalculate the payment, and ask yourself honestly whether you could still pay it if your household income dropped by 20%. If either answer is no, borrow less.
Mortgage CalculatorMonthly payments, total interest and LTV sensitivity across fixed-rate terms.Fixed, tracker, and the discount game
UK mortgages almost always start with a fixed-rate period — most commonly 2, 5 or 10 years — after which the loan reverts to the lender's Standard Variable Rate (SVR). The SVR is usually higher than the rates on new fixed deals, which is why borrowers commonly arrange a new deal before the fix ends. Two-year fixes put you back in the market every two years, each time with fees; a five-year fix gives a predictable payment for longer, sometimes at a slightly higher rate.
Tracker mortgages — which move up and down with Bank Rate plus a margin — suit borrowers who can absorb a rise in payments if rates go up. If your budget is tight, the certainty of a fix is usually worth more than the chance of a cut.
The paperwork the bank will want
Expect to provide: three months of bank statements for every account you hold; three months of payslips; the last two years of P60s (or two years of SA302s if self-employed); proof of deposit source (a bank statement showing the money accumulated, or a gift letter from the parent giving it); ID; proof of address. First-time buyers underestimate how invasive this is. Lenders must check your income and where your deposit came from; your job is to have the documents ready and not to be defensive about a one-off takeaway spend from 2024.
05Completion and the week after
From accepted offer to moving in usually takes a few months. The bottleneck is rarely the mortgage or the buyer: it is the chain of solicitors, searches, and — if the property is leasehold — the freeholder's management pack. Chasing your solicitor is not rude. It is expected and necessary.
What actually happens on completion day
On completion morning, your solicitor wires the purchase money (your deposit + the mortgage drawdown) to the seller's solicitor. The seller's solicitor confirms receipt, the estate agent releases the keys, and you are a homeowner. Within 14 days your solicitor must file the SDLT return and pay the tax. They then apply to HM Land Registry to register you as the owner; registration can take weeks or months, and once it is done you receive the title information document. The register held by HM Land Registry is the record of ownership, so you do not need paper deeds.
The other costs no-one warns you about
| One-off cost on a £280,000 first home | What to know |
|---|---|
| Mortgage arrangement or product fee | Varies by deal and can be zero. Adding it to the loan means paying interest on it. |
| Lender's valuation | Often free with the mortgage; it is for the lender, not a survey of the home. |
| Survey (RICS Level 2 or Level 3) | Get quotes; price depends on the property's size, age and location. |
| Conveyancing and searches | Get two or three fixed-fee quotes and check what is included. |
| HM Land Registry fee (England and Wales) | £150 applied for online, or £330 by post, for a price between £200,001 and £500,000 (Scale 1). |
| Removals | Depends on distance and volume. |
| Buildings insurance | Lenders usually require it from exchange of contracts. |
These are in addition to SDLT and in addition to the deposit. A first-time buyer with exactly enough saved for the deposit and nothing else will reach completion day solvent but brittle — one burst boiler away from debt. Keep a cash buffer of £2,000 to £3,000 beyond the deposit, ringfenced for the first six weeks after moving in.
Day-one housekeeping
Inside the first week: change the locks (the previous owners almost always have spare keys somewhere), take meter readings the moment you move in and photograph them, notify your council of the move-in date to register for council tax, and transfer utility accounts into your name. Inside the first month: update your address with HMRC (the online tax account is the fastest route), your bank, your employer's payroll, and the DVLA. None of this is hard; all of it gets forgotten.
The keys are not the end of the process. They are the start of a thirty-year arrangement between you and a lender. Treat that arrangement like a serious one.
The five most common first-time buyer mistakes
- Stretching to the lender's maximum offer. Banks are not wrong about affordability but they are not on your side either. A 20% lower mortgage is a lifetime of optionality.
- Forgetting the cliff at £500,000. First-time buyer SDLT relief evaporates entirely at £500,001. If a property is listed a little above £500,000, work out the SDLT at the price you might agree before you make an offer.
- Choosing a fix on the headline rate alone. Compare the total cost over the fixed period, fees included, and think about how long you expect to stay.
- Skipping the survey. The lender's valuation is not a survey. A RICS Level 2 or Level 3 survey can find problems that cost far more than the survey to put right, and gives you grounds to renegotiate.
- Running the bank account to zero for completion. Keep a buffer. Things break in the first month of ownership because the previous owner was not going to pay to fix them on the way out.
A note on advisors
You do not need a mortgage broker, but many first-time buyers use one. A broker can compare deals from a range of lenders, including some that are not on comparison sites, and help with the application. Ask how the broker is paid (by the lender, by you, or both) and whether it searches the whole market before you start. Choose a conveyancer just as carefully, comparing what each quote includes rather than the price alone.
This guide is general information, not regulated financial advice. Mortgage advisers must be authorised by the FCA: check any broker or adviser on the FCA Register before you use them.
Sources
Figures and rules checked on 3 October 2026 against GOV.UK: SDLT residential property rates (first-time buyer relief and standard rates), GOV.UK: Lifetime ISA (limits, bonus, permitted withdrawals and the 25% charge), HM Treasury: Help to Buy ISA statistics (scheme rules and dates), HM Land Registry: registration fees, Bank of England: high loan-to-income lending (1 April 2026), Revenue Scotland: LBTT rates and Welsh Government: LTT rates. The saving and LISA figures are our own arithmetic on the stated rates.