First-Time Buyer: Complete Cost Guide

First-time buyers in England and Northern Ireland enjoy significant stamp duty relief. You pay no stamp duty on properties up to £300,000. For homes priced between £300,001 and £500,000, you pay 5% only on the portion above £300,000.

This means on a £400,000 property, a first-time buyer pays £5,000 in stamp duty, compared to £7,500 for a home mover — a saving of £2,500. Properties priced above £500,000 do not qualify for any relief, and you pay standard rates on the entire amount.

In Scotland, first-time buyers receive relief on the first £175,000 under LBTT. In Wales, the LTT threshold for all buyers starts at £225,000, with no specific first-time buyer relief.

Most lenders require a minimum 5% deposit, though putting down 10% to 15% secures noticeably better interest rates. On a £250,000 property, a 5% deposit is £12,500 while 15% is £37,500.

Lifetime ISA: In 2026/27 you can save up to £4,000 per year (this counts towards your £20,000 overall ISA allowance) and receive a 25% government bonus of up to £1,000 per year, on a property worth £450,000 or less. The account must be open for at least 12 months before you use it, and withdrawing for anything other than a first home before age 60 triggers a 25% withdrawal charge.

Gifted deposits: Many first-time buyers receive help from family. Lenders accept gifted deposits but require a signed letter confirming the money is a gift, not a loan. The gifter may need to provide bank statements.

A larger deposit reduces your loan-to-value (LTV) ratio, which directly affects your mortgage rate. Moving from 95% LTV to 90% LTV can save hundreds of pounds per year in interest.

Solicitor or conveyancer fees: Expect to pay £1,000 to £2,000 for the legal work, plus £300 to £500 in disbursements (local authority searches, Land Registry fees, and bank transfer charges). Leasehold properties cost more due to additional legal complexity.

Survey costs: A Level 2 homebuyer survey costs £400 to £700, while a full Level 3 building survey runs £600 to £1,500. Surveys are technically optional but strongly recommended — they can uncover defects that cost tens of thousands to repair.

Mortgage arrangement fee: Lenders charge £0 to £2,000 to set up your mortgage. Fee-free deals often come with slightly higher interest rates. You can usually add this fee to your loan, but you will then pay interest on it for the full term.

Valuation fee: Your lender requires a property valuation, costing £150 to £1,500 depending on value. Many lenders now offer free basic valuations as part of their mortgage package.

Removal costs: Professional movers charge £400 to £1,500 depending on distance and volume. DIY van hire starts from £50 to £200 but requires time and helping hands.

Furnishing costs: Unlike home movers, first-time buyers often start with very little furniture. Budget £3,000 to £10,000 for essentials: bed, sofa, white goods (washing machine, fridge-freezer), curtains, and basic kitchenware. Buying second-hand can halve this figure.

Immediate repairs and decoration: Even new-builds may need curtain poles, shelving, or garden work. Older properties might need updating — redecorating a three-bedroom house typically costs £1,500 to £5,000 if done professionally.

Mail redirection: Royal Mail charges from around £40 for 3 months (per surname, UK address). It is worth setting up to catch any post sent to your old address.

Many first-time buyers focus entirely on the purchase and underestimate recurring costs. These ongoing expenses determine whether you can truly afford your home long-term.

Mortgage payments: Your largest monthly outgoing. On a £225,000 mortgage at 4.5% over 25 years, monthly repayments are approximately £1,250. Even small rate changes have a big impact — a 1% increase adds around £130 per month.

Council tax: Annual charges range from £1,200 to £4,500 depending on your property band and local authority. This is paid monthly and is often higher than new homeowners expect.

Energy and utilities: Gas, electricity, water, broadband, and contents insurance typically cost £2,500 to £4,000 annually for an average home. Standing charges alone add up to £400–£500 per year before you use any energy.

Maintenance reserve: Budget 1% to 2% of your property value each year for repairs and upkeep. On a £250,000 home, that is £2,500 to £5,000 — covering boiler servicing, plumbing issues, and eventual larger repairs like a new roof or windows.

Buildings and contents insurance: Lenders require buildings insurance from completion day. Expect to pay £150 to £400 annually, plus £100 to £300 for contents cover.

Lifetime ISA (LISA): Save up to £4,000 per year and receive a 25% bonus from the government (£1,000 maximum a year). You can open one aged 18–39 and keep paying in until you turn 50; the property must be worth £450,000 or less and the account must be open for at least 12 months before you use it toward a purchase.

Shared Ownership: Buy a share (usually 25–75%) of a property and pay rent on the rest. This reduces the deposit and mortgage needed but comes with rent payments and service charges. You can buy additional shares over time through "staircasing."

First Homes scheme: Offers new-build homes at a discount of at least 30% to first-time buyers and key workers. The discount is passed on when you sell, keeping homes affordable for future buyers.

Freedom to Buy (mortgage guarantee scheme): The government's permanent mortgage guarantee scheme, launched in July 2025 to replace the temporary version, encourages lenders to offer 95% LTV mortgages. This keeps the deposit needed as low as 5%, though interest rates are typically higher than at 90% LTV.