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By continuing to use the site you agree that we can save them on your device. Cookies are small text files which are placed on your computer and which remember your preferences/some details of your visit. Our cookies don’t collect personal information. For more information, please read our updated privacy and cookie policy, which also explains how to disable cookies if you wish to.

How do I budget for my first mortgage?

How much do I need to save before I can afford to buy my own property?

How much you will need to save before you can purchase a property will vary depending on its value.

Most mortgage providers will request a minimum deposit of 10% of the property’s value. However, first-time buyers may be able to reduce this amount by taking advantage of various schemes that are currently available. Examples of such schemes are government funded Help to Buy schemes, shared equity and shared ownership schemes.

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How much can I borrow?

Your mortgage provider will take into account a number of factors in order to determine how much you’re able to borrow, including:

  1. Your current income
  2. Your current outgoings
  3. Your age and proposed term
  4. Your credit rating
  5. The size of your deposit

Historically mortgage lenders have used income multiples to determine how much they can lend you. More recently there has been a shift towards assessing your application by looking at monthly affordability. This means that lenders will assess your ability to meet your monthly commitments including the proposed mortgage payments.

Use our calculator
budget planner icon

Use a budget planner to assess how much you can realistically afford to save each month.

If you need £20,000 for a deposit, consider how long it could take you to save up. This also applies to the mortgage payment; what percentage of your income are you happy using to pay your mortgage?

Try our calculator

What does Loan to Value mean (LTV)?

Loan to Value is a term used by mortgage lenders to describe the ratio of a loan in relation to the value of the property. This is usually portrayed as a percentage, reflecting the percentage of the property that is mortgaged and the amount that is owned by you (your equity).

What additional costs and fees do I need to save for?

additional costs iconAs well as your deposit, you will need to think about a range of other costs that are part of the house-buying process:

Arrangement fee

For certain mortgage products there will be an arrangement fee to pay; this is usually in return for a lower interest rate. Arrangement fees are also known as product or application fees and they can either be paid upfront or may be added to the balance.

Conveyancing/Legal fees

To purchase a property you will need to appoint a solicitor or conveyancer to act on your behalf. They either charge you a flat fee, or a percentage of the value of the property.  These costs cover the the legal work associated with buying a home such as conveyancing and searches of local authority data. Look at The Law Society's website to find a suitable solicitor. When you are ready to select a solicitor we can help, we also have a recommended panel of solicitors to handle the legal side of purchasing your first home.

Mortgage advice fees

These are fees usually charged by a broker or an IFA (Independent financial advisor) for arranging your mortgage. There may also be fees to pay in return for the mortgage advice you receive. Ensure that you check this upfront. If you receive advice from The Co-operative Bank's mortgage advisers you'll not be charged for receiving advice.

Furnishing and decorating your home

Whether you have been living in an unfurnished or furnished property previously, it is likely that you will need to purchase home furniture for your new home. It is vital that you account for any furniture you'll need to buy and any necessary decorating in your savings plan to avoid any disappointments.

Valuation and valuation administration fees

This covers the valuation of your home and the assessment of the valuation. Mortgage lenders will require a valuation to be completed on the property that you are looking to purchase.

Buildings insurance

Lenders will insist that you have some form of buildings insurance in place for your home by the completion date. Ensure that you factor in this cost in your planning.

Stamp duty

When you are buying a home you will also need to take into account stamp duty. Stamp duty is a tax that is charged as a one off when you purchase a property. The amount of stamp duty you pay is linked to the purchase price of the property.

alert icon   Please see our stamp duty calculator to see how much you may be charged.

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Next step

Am I eligible for a mortgage?

You'll need to find out if you're eligible for a mortgage, this section explains some key things you'll need to know, and what factors impact the amount you can borrow.

Find out if you're eligible
Your home may be repossessed if you do not keep up repayments on your mortgage