Soaring house prices, rising interest rates, increasing student debt ... with so many obstacles it’s no wonder we all feel that the elusive first rung of the ladder to property heaven is inching further and further away! But fear not, for the vast majority of young people, buying your first property can be a realistic goal with the right planning and help from others. We’re here to give you some handy advice on getting finance together for your property purchase and saving along the way, with the reward being your own four fabulous walls!

Searching for your first home has never been easier than now due to an abundance of property advertising websites around. But before your heart starts racing and your head hits the clouds with all those images of great properties, it’s vital to know your finances and what you can afford.

so what's it all going to cost?

It might seem cruel to scare you at this early stage by going through all the costs involved in the purchasing process, but realistic planning and getting into a saving habit early on is the best preparation for your first steps into the property world.

mortgage

The biggest cost will obviously be the asking price of the property. As you’ll probably be taking out a mortgage on this, it is vital to know how much your monthly repayments will be and whether they can go up (currently much more likely than going down!). Remember that if you fall into arrears with repayments, your home could be repossessed by the mortgage lender – you’ll find this term in the small print! A good tip is to use your current rental amount as a maximum, as you will have additional charges as a home-owner.

deposit

Deposits can be quite a burden, which usually have to be paid for when you exchange contracts (see our conveyancing map for the process). Traditionally, vendors wanted a 5 to 10% deposit, which would be between £7500 and £15000 for a £150,000 property! This sort of cash is difficult to get together for even the most avid saver, but if you have a mountain of student debt it can feel impossible. Don’t let the deposit put you off though, there are a number of ways to get around this which we will highlight later (click here for mortgage types).

stamp duty

Stamp duty will cost you 1% of the purchase price for properties between £125,000 and £250,000. Your solicitor will request this figure along with their invoice for conveyancing fees. If you’re planning to buy in a large city it will be difficult to avoid this low threshold. 

solicitor's fees 

The solicitor will also charge you a fee for performing all the necessary searches to check everything is in order. Expect your solicitor’s charges to come to at least £2500 inclusive of stamp duty. Click here for a more detailed breakdown of solicitor’s costs.

arrangement fee

Most mortgage lenders will charge an arrangement fee, which vary from lender to lender. These usually cost between £200 and £600, but if you’re lucky they may build this into your mortgage for you! 

surveys - well worth the money!

A survey is essential for peace of mind that the property you are purchasing is worth the asking price. The surveyor should also highlight any repairs the property may need that could leave a hefty hole in your already empty wallet at a later date! The mortgage lender will do a basic survey before lending you the money, but this is really only to check that they are lending you the correct amount of money based on their surveyor’s valuation. There are different sorts of surveys, but usually a homebuyers report, costing between £300 and £600, will highlight the work needed without breaking the bank. If your property is more than 30 years old or a large property your surveyor will probably recommend a full structural survey, which is more detailed but obviously more expensive!

the extras

Additional costs to consider are contents insurance (from about £100 a year), removals costs (£50 for a van for a day to £500 or more for a removal company), potential cost of installing a telephone line if you live online (contact BT, but charges can be around £100 for a new line) and initial redecorating costs (you decide!).  If your purchase gets delayed and you have to temporarily move in with a friend who lives in a shoebox, you may need to store all your junk in a storage unit. A unit designed to hold the contents of a 2 bedroom flat will cost you between £100 and £250 per month depending on location.

i fell asleep after 'stamp duty' ... how much?

Most first time buyers will therefore need at least £3000 (plus any deposit) to complete that elusive first house purchase. This may seem a huge amount of money, but look at it this way; it is only 500 packs of cigarettes, 300 takeaways, 100 night outs, 50 items of clothing or 4 holidays! Needless to say, resisting the urge to splurge on impulsive and extravagant purchases will help free up extra money for saving. For more tips on saving, visit our great ways to save page.