Affording Your Home

The purchase price is only the beginning. Before you commit, you need a full picture of every pound you will spend: upfront, ongoing, and down the line.

These are the costs that continue month after month, year after year. Many first time buyers underestimate them.

Your largest ongoing expense. In early 2026, average two year fixed rates sat around 4.8% to 5.1% depending on your deposit size. Best buy deals for buyers with a 40% deposit can be as low as 3.5% to 3.7%.

Varies hugely by area. Check your local council's website for exact bands.

Required by your mortgage lender. Contents insurance is optional but strongly recommended.

Gas, electricity, water, broadband. Budget £150 to £250 per month for a typical home.

A good rule of thumb is to set aside 1% of your property's value each year for upkeep.

If you buy a leasehold flat, these are unavoidable. Ask for a full breakdown before you buy.

The 50/30/20 rule is a simple framework that works well for homeowners. Adapt the percentages to your own circumstances, but use this as a starting point.

If your mortgage alone pushes your "needs" above 50%, that is a sign you may be stretching too far. Lenders will approve you for a certain amount, but that does not mean you should borrow the maximum.

The Lifetime ISA (LISA) remains one of the best tools available for first time buyers. You can save up to £4,000 per year, and the government adds a 25% bonus (up to £1,000 per year) on top. You must be aged 18 to 39 to open one, and the property you buy must cost £450,000 or less.

Important update: the government has announced that the LISA will be replaced by a new, simpler first time buyer ISA from April 2028. Until then, you can still open and contribute to a LISA. If you already have one, you will be able to keep contributing indefinitely, even after the replacement product launches. The new ISA is expected to pay the bonus as a lump sum at the point of purchase rather than monthly, and will remove the controversial 25% withdrawal penalty.

1. Pay yourself first. Set up an automatic transfer on payday so the money leaves your account before you can spend it.

2. Track everything for one month. Before making a savings plan, know where your money actually goes. Apps like Emma, Plum, or your banking app's spending insights make this easy.

3. Cut the big three. Housing, transport, and food are where most money goes. Even small changes (meal planning, switching energy provider, cycling one commute a week) compound quickly.

4. Redirect windfalls. Tax refunds, bonuses, birthday money, and pay rises are all opportunities. Redirect at least half of any windfall straight into your deposit fund.

5. Sell what you don't use. Clothes, electronics, furniture. Every pound counts when you are building a deposit.

• Shared Ownership: Buy a share (25% to 75%) of a home and pay rent on the rest. Requires a smaller deposit and mortgage. Income caps apply (£80,000 across England).

• First Homes: New build homes sold at a minimum 30% discount to local first time buyers and key workers.

• Mortgage Guarantee Scheme: Encourages lenders to offer 95% loan to value mortgages, meaning you only need a 5% deposit.

• Right to Buy: If you are a council or housing association tenant, you may be eligible for a significant discount on your home.

Before you buy, aim to have three to six months of essential expenses saved separately from your deposit. This is your safety net for boiler breakdowns, unexpected repairs, or a period of reduced income. Without it, one surprise bill can push you into debt.

Once you are a homeowner, keep topping it up. The 1% rule (setting aside 1% of your home's value each year) is a practical target for ongoing maintenance.