Buying your first home is an exciting milestone, but working out how to afford it can feel like a challenge. With deposits, mortgage payments and everyday expenses to consider, you might wonder how other first-time buyers manage to get onto the property ladder.
The good news is that there are several ways to make buying a new-build home more achievable. From building your savings and choosing a mortgage to exploring first-time buyer schemes, understanding your options is a great place to start.
In this guide, we’ll explain how to afford your first home, what affects your budget and how Persimmon can help you take your next steps towards homeownership.
For many first-time buyers, the biggest challenge is saving enough money for a deposit while keeping up with everyday living costs. You might also need to budget for mortgage payments, legal fees and other expenses that come with buying a home.
It’s understandable if the overall cost feels daunting. However, the price of a property isn’t the only factor that determines whether you can afford it. Your income, savings, credit history and the mortgage options available to you all play a part.
There are also ways to make buying a new house more manageable, such as looking at different property prices, saving regularly and exploring schemes designed to support homebuyers.
The first step is to understand what you can realistically afford and which options could help you get there.
Before looking at how to afford a new house, it helps to understand the main costs involved. These are the factors that will shape your budget and influence the type of home you can buy.
So, how can first-time buyers afford homes when saving for a deposit and managing other costs can seem difficult?
There are three main areas to explore: first-time buyer savings, first-time buyer mortgages and first-time buyer schemes. Understanding how they work together can help you build a clearer picture of your options.
Saving for a deposit is one of the biggest steps towards buying your first home. The amount you need will depend on the property price and mortgage you choose, so it’s worth setting a realistic savings goal.
Here are a few ways to build your first-time buyer savings.
Set a savings target
Work out how much you may need for your deposit and other buying costs. Having a clear goal can make it easier to track your progress.
Save regularly
Putting money aside each month, even if it’s a small amount, can help your savings grow over time. A standing order into a dedicated savings account can make this easier to manage.
Review your spending
Look at your regular outgoings and see whether there are any areas where you could save. Making a few changes could help you reach your goal sooner.
Explore savings options
A Lifetime ISA may be worth considering if you’re eligible. It can help you save towards your first home, with a government bonus on qualifying savings, subject to the scheme rules.
Consider support from family
Some first-time buyers receive help from family towards their deposit, sometimes known as the Bank of Mum and Dad. This could take the form of a gift or loan, so make sure everyone understands the arrangements and any mortgage requirements.
Need more saving tips to get you closer to your first home? Check out our savings guide.
A mortgage is a loan that helps you pay for your home. Most first-time buyers use a mortgage to cover the difference between their deposit and the purchase price.
For example, if you buy a £200,000 home with a £10,000 deposit, you would need a mortgage of £190,000.
The amount you can borrow depends on your income, spending, credit history, deposit and the lender’s criteria.
How do first-time buyer mortgages work?
You usually repay your mortgage over an agreed period, known as the mortgage term. Your monthly payments will depend on how much you borrow, the interest rate and the length of the mortgage.
You may come across fixed-rate and variable-rate deals. It’s worth comparing your options and getting advice from a qualified mortgage adviser before choosing a deal.
How much can you borrow?
There isn’t one mortgage amount that every first-time buyer can get. Lenders assess your circumstances individually.
A mortgage adviser can help you understand how much you may be able to borrow and what your monthly repayments could look like.
Remember, being offered a certain amount doesn’t necessarily mean you should borrow the maximum. Choose a mortgage that fits comfortably within your budget.
First-time buyer schemes can offer another way to make buying your first home more achievable. Depending on the scheme, they may help with your deposit, mortgage costs or the amount you need to pay upfront.
At Persimmon, we offer a range of buying schemes that could help you take your next step towards homeownership.
New-build homes can be a suitable option for first-time buyers because they come in a range of prices, sizes and layouts. Some may also be available with buying schemes that could help eligible buyers with their purchase.
New homes can offer modern, energy-efficient features, which may help with running costs. However, affordability depends on your income, deposit, mortgage and the property you choose.
It’s important to compare the full cost of buying and running a home before making a decision.
First-time buyers should consider their deposit, mortgage repayments and other buying costs, such as legal fees and moving expenses.
You should also think about ongoing costs, including energy bills, council tax, insurance and maintenance.
Some new-build homes may have service charges or estate management costs, depending on the property and development. Your sales team can help you understand the costs associated with the home you’re interested in.
Working out how to afford your first home starts with understanding your budget, building your savings and exploring your mortgage options. First-time buyer schemes can also offer another route towards homeownership, depending on your circumstances.
At Persimmon, we’re here to help you take the next step. From finding a new-build home that suits your needs to exploring our buying schemes, our friendly team can guide you through the process.
Explore our first-time buyer guides and buying schemes today to discover how you could get closer to owning your first home.
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