Learn how much you need to save for your first home
How much money do you actually need?
To work that out, you need to work out how much of a deposit you would need, as well as considering other costs involved in buying a home and moving.
It’s a good idea to consider just how much you really need to save for your first house or flat as early as possible, so you can budget properly and avoid overstretching yourself financially.
Take a look at our First Home Steps article: How to save for a house deposit.
The biggest cost for any first-time buyer will be the deposit, the lump sum you’ll pay upfront towards the cost of your property.
You’re likely to need to save at least 5% as a deposit towards the cost of your home, however you may need a deposit of up to 10 or15%, depending on what mortgages are available.
Let’s say you want to buy a home costing £220,000, which is the average for first time buyers according to Zoopla. So, you’d need to save at least £11,000 for a 5% deposit. Or, if for example, you plan to spend £150,000 on a new home, then the deposit drops to a minimum of £7,500.
Bear in mind though that 5% is generally a minimum for a deposit and saving more will give you access to a wider range of cheaper mortgages.
You’ll pay the remainder of your house price as monthly mortgage payments. But these aren’t the only costs when buying a home.
You may be charged a tax for buying your first home. This depends on what part of the UK you live in, and how much you spend.
In England and Northern Ireland, the tax is called stamp duty. But if you buy your first home for less than £300,000 – or less than £500,000 until 31 March 2021 – then you don’t need to worry about this charge, as you’ll be totally exempt from it.
In Wales, home buyers - including first timers - pay a Land Transaction Tax if their property costs more than £180,000. Until 31 March 2021, the threshold has been temporarily lifted to £250,000.
Depending on your mortgage type and the lender you go with, they may charge you several fees.
Among these is a valuation fee, which may cost anything from £150 or higher. A valuation fee enables your mortgage lender to assess the value of the property, helping it to be sure that the home you’re buying is worth roughly the amount you’re planning to pay for it.
You may also have to pay your mortgage lender a booking fee of £99 - £250 when you apply for your mortgage, and an arrangement fee – a charge for your lender to set up your mortgage – of up to £2,000.
To help you find a surveyor, you can use this tool from the Royal Institution of Chartered Surveyors (RICS): Find a qualified surveyor near you.
While it’s up to you to thoroughly check a property before you buy it - and to ask lots of questions – you can pay a professional surveyor to go a step further and discover any other problems in the house that could be costly to repair.
A surveyor will highlight any problems which may mean you’ll need to spend more money on the house - or may even put you off buying it in the first place.
Surveys range in costs, depending on whether you opt for a basic home condition survey, for around £250, or full structural survey, which can cost over £600.
To find a good conveyancer or solicitor, you can ask family and friends for recommendations or try a comparison tool such as this one from Moneysupermarket.
A solicitor or conveyancer can help you with the legal work involved in buying a home, such as handling contracts and transferring funds to pay for your property. They will also do local searches, to check whether there are any local plans or problems, such as a high flood risk.
You’re likely to pay around £1,500 including VAT at 20% for a solicitor or conveyancer to help you to buy your property, as well as another £250-£300 for local searches.
There are plenty of other fees to consider at the time of buying your property, moving in and afterwards. These include:
- Removal costs: you might spend £300-£600 to hire a removal firm, although the move can be made much cheaper if you hire a van and do it yourself.
- Decorating and then furnishing your home.
- Council tax: for more information on how this works, take a look at our Council tax explainer.
- Insurance: at a minimum, your lender will require you to take out buildings insurance
- Bills, such as utilities (electricity, gas, water) - see our page, A guide to utilities.
- Leaseholders costs: If you buy a leasehold property, you’ll have additional costs. See our page on Leasehold vs freehold.
How to reach your goal
All of these costs add up, so it’s important to budget carefully for your home purchase.
This can seem quite daunting. But don’t despair, there are lots of ways you can gradually build up a savings pot, even if you are paying monthly rent at the same time.
The important thing is to understand all of the costs involved in buying your first home and ensure you don’t overstretch yourself.
Click on the sections below to explore what you need to know at each stage of your home buying journey: