4 things you need to know to buy your first home 4 things you need to know to buy your first home
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4 things you need to know to buy your first home

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by Jamie Phythian

Whether you’re living at home or renting, you’ll probably have thought about what it takes to get on the property ladder.

Here are 4 things you need to know before you even think about house hunting.

1. How much do you actually need to save up

It sounds obvious, but you need to really think about the type of property you’d like to live in. This could impact on the cost of any home improvements you might want to do. These can’t be covered by your mortgage borrowing, so you’ll need some extra personal cash.

Now try figure out how much you might need. A property worth £200,000 would require...

  • £20,000 deposit - 10% (at the very least!)
  • Around £1,500 for legals, land registry and so on (this could cost more)

That’s already a total of £21,500!


2. When do you want to buy a property

Set a realistic goal. Something too far away will seem pointless and something too soon will be unrealistic.

Here’s a simple way to think about it.

1. Figure out the total amount of money you’ll need for the      property you want (see point 1)

           Then divide it by...

2. The amount you could realistically save each month

For someone wanting to buy a £200,000 property who is able to save £400 a month, it would take around 5 years to get enough cash together.

3. What sort of government schemes could         help

The lifetime ISA (LISA) is really useful for getting on the property ladder.

The government will give you a 25% bonus on the total amount you pay into your LISA, not including investment interest or investment growth.

That means if you pay in the maximum amount of £4,000 in a year, you’ll receive a tax-free bonus of £1,000 that year.

If we use the previous example of a £4,800 budget per year (£400 per month), here’s how the LISA could work:

  • £5,000 could go into the LISA, costing only £4,000 (£1,000 free money from the government)
  • £800 could go into a regular savings account

That’s £23,200 in 4 years, with £4,000 of that coming from government top ups!

4. How much does a mortgage cost

Some say being a homeowner is an investment, whereas, renting is dead money. But never forget, buying and owning a property has so many extra costs that you might miss.

A £200,000 property with a £180,000 mortgage would cost you...

  • £700 mortgage payments per month (Using a 2% interest rate over 25 years)

But if interest rates ever get back up to around 5%, you’d be paying £900 per month.

This still might seem pretty good compared to rent. But, here are just some of the indirect costs you should think about…

  • Life & critical illness cover - you’ll need this to make sure your loved ones are looked after if something unexpected happens to you. Based on the mortgage example above, that could be anything from £100 a month or more to cover 2 people (Assuming a healthy, 30-year-old non-smoker)
  • Home insurance - on average that’s another £30 a month

That’s over already £1,500 a year and it's only a few of the costs you’ll need to think about!

And don’t forget, if you’re buying a flat, it can get even pricier. You’ll have to pay for things like service charges and car parking.


Although there’s a lot of things to think about before buying a property, it’s still more achievable than you might think. And it could be the best thing you do.

If you’re hundred percent sure you want to buy, figure out everything you’ll need to make it happen.

Then, make a real financial plan to get yourself there.

Learn how we helped Noah get on the property ladder here


Posted: 01/11/2017


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