As a financial advisor, I’ve seen many first-time buyers make costly mistakes that could have been avoided with proper guidance. This post aims to provide clear, practical advice specifically tailored to the UK housing market in 2025.
The Hidden Costs of Buying Your First Home
When budgeting for your first home, many people focus solely on the deposit. However, there are numerous additional costs to consider. Beyond the deposit, you’ll need to account for Stamp Duty Land Tax (SDLT), though first-time buyers currently enjoy relief on properties up to £425,000. Legal fees for solicitors or conveyancers typically range from £800 to £1,500, while surveyor costs can add another £600 to £1,500 for a comprehensive structural survey. Don’t forget mortgage arrangement fees (often between £1,000 and £2,000) and moving costs, which can range from £300 for a small flat to £1,200+ for a larger home.
Understanding Mortgages in Today’s Market
With current interest rates in the UK hovering around 4.5%, it’s crucial to understand the different mortgage options available. Fixed-rate mortgages offer stability with unchanged payments for 2-10 years, but may come with higher initial rates. Variable-rate mortgages currently offer lower initial rates but carry the risk of payment increases if the Bank of England raises rates further. Offset mortgages allow you to use your savings to reduce the interest you pay, which can be particularly beneficial for higher-rate taxpayers looking to optimise their financial position.
Government Schemes Worth Considering
Several schemes are available to help first-time buyers in the UK enter the property market. The Lifetime ISA allows you to save up to £4,000 annually, with the government adding a 25% bonus (up to £1,000 per year). The First Homes scheme offers discounts of at least 30% on market value for eligible first-time buyers. Shared Ownership lets you purchase a share (25-75%) of a property and pay rent on the remainder, with options to increase your share over time as your financial situation improves.
Common Pitfalls to Avoid
From my experience advising clients, there are several common mistakes to watch out for. Many buyers overlook the EPC rating, but properties with poor energy efficiency can be costly to heat and may require expensive improvements to meet future regulations. Skipping a proper survey to save money is another false economy, as it can lead to discovering expensive structural issues after purchase. Finally, stretching your budget too far is risky – ensure you have emergency funds left after purchase for unexpected repairs and ongoing maintenance to avoid financial strain.
Final Thoughts
Buying your first home is a significant milestone, but it needn’t be overwhelming. With careful planning, realistic expectations, and professional advice, you can navigate the process successfully.
If you’re a first-time buyer in Leeds or elsewhere in Yorkshire and would like personalised financial advice on mortgages or buying your first home, feel free to book a consultation with our team.
Written by Jennifer Race Finance