Buying your first home in your 20s

What are the benefits of early homeownership?

Getting on the property ladder early comes with several advantages. Rather than paying rent with nothing to show for it, your monthly mortgage payments build equity in an asset that’s yours. Other benefits include:

Longer mortgage terms

When buying a home in your 20s, you may choose a 30-35-year mortgage term, which gives you more time to pay off the loan with smaller monthly payments. This flexibility can make homeownership more achievable and leave you with extra disposable income each month.

First-time buyer support

As a first-time buyer, you have access to government schemes and developer incentives designed to help you onto the property ladder, including:

• First Homes scheme

• Deposit Boost

• Lifetime ISAs

Why can buying a home in your 20s be a smart move?

Buying a home for the first-time in your 20s gives your investment more time to grow, as property values typically increase over time. You’ll also have the freedom to make your space truly your own, from decorating to renovations, without needing a landlord’s permission.

Building equity vs renting

When you rent, your monthly payments go straight to your landlord. When buying a home, every mortgage payment builds equity in your property. Over time, as you pay your monthly mortgage fees and property values increase, you’ll build wealth that you can draw on in the future.

Financial and lifestyle considerations

Buying a home in your 20s gives you more flexibility when choosing a location. You’re less likely to have commitments like school catchment areas or accessibility requirements, which means you can be strategic about where you buy.

 

Consider up-and-coming neighbourhoods where property values are expected to rise, setting yourself up for long-term profit. At this stage of life, you can prioritise areas with good transport links and vibrant social scenes that match your lifestyle.

How much can you afford in your 20s?

Understanding what you can realistically afford as a first-time buyer is a crucial step when buying a home in your 20s.

Assessing your budget and savings

Most lenders will let you borrow between four and five times your annual income, though this varies based on your circumstances. Track your income and outgoings for at least three months to understand your spending habits. Be realistic about what you can comfortably afford each month, factoring in not just your mortgage but also bills, food, leisure and a buffer for unexpected costs.

 

If you’re on an entry-level salary, consider buying a home with a partner or friend to increase your borrowing power and access better properties. Just remember that getting a mortgage together will financially link you, so their credit history will impact yours.

Understanding deposits and Loan-to-Value

Your deposit is typically at least 5% of the property price for first-time buyers, though the larger your deposit, the better your Loan-to-Value (LTV) ratio. LTV refers to the percentage you’re borrowing versus how much you’re putting down as a deposit.

 

The lower your LTV, the less risky you appear to lenders, meaning they may offer you better interest rates when buying a home. This translates to lower monthly payments and less interest paid over the life of your mortgage. If possible, aim for a 10-15% deposit.

Saving for your first home

If you're buying a home for the first time, focused saving strategies can help you reach your deposit goal faster than you think.

How to save for a deposit efficiently

Start by making lifestyle changes that free up disposable income. Cut back on meals out, takeaways, unnecessary shopping and expensive holidays. Setting up a direct debit to automatically transfer funds to your savings on payday also helps reduce the temptation to spend.

 

Consider taking on additional work to boost your savings. Whether it’s freelancing, a weekend job or selling items you no longer need, putting every extra pound towards your deposit will speed up your timeline significantly.

 

Read our guide for more tips on how to save for a deposit in London.

Tips for reducing costs while renting

While saving for your deposit, look for ways to reduce your current housing costs. Consider moving to a cheaper rental property or a house share to split bills. Track your spending by reviewing bank statements and highlighting necessities in one colour and unnecessary expenses in another.

 

Use rewards credit cards for everyday spending to earn points redeemable for shopping vouchers or experiences. You can treat yourself without impacting your savings.

Utilise savings accounts and schemes

There are several schemes specifically designed to help first-time buyers build a deposit faster, for example:

• Lifetime ISA – Save up to £4,000 per year, and the government will add an extra 25% bonus (up to £1,000 annually). This is essentially free money towards your deposit, making it one of the most valuable savings tools available.

• Deposit Boost – Barratt London will add an extra 5% to your existing deposit, reducing how much you need to borrow. A smaller mortgage means lower monthly payments and access to better interest rates, potentially saving you thousands over the life of the loan.

Combining these schemes can significantly accelerate your homebuying timeline. Research your options thoroughly before deciding.

Choose the right home for your 20s

Buying a home in your 20s means finding a property that works for your current lifestyle and future plans.

New-build homes vs older properties

Older properties might have character, but they can come with hidden maintenance costs and renovation needs that stretch your budget. New-build homes offer several advantages for young buyers, including:

• Open-plan layouts designed for modern living

• Contemporary finishes

• Energy efficient with lower utility bills

• A 10-year NHBC warranty

• No chain causing delays

Consider location, local amenities and your commute

Think about your daily commute and transport links.London’s excellent network means you can live further out while still enjoying quick access to central London. Consider your lifestyle priorities: do you want bustling high streets, quiet residential roads, green spaces, gyms or vibrant nightlife nearby?

 

Visit potential neighbourhoods at different times of day to get a genuine feel for the area. Remember that areas with good transport connections and ongoing regeneration often see stronger property value growth over time.

What are the benefits of buying your first home in London?

London remains one of the world’s most exciting cities to live in. Buying a home in the capital means you’re investing in a market with consistent long-term demand. Even if property prices seem high, buying strategically in up-and-coming areas can deliver strong returns.

 

Areas like Barking and Dagenham, Croydon, Bexley and parts of Enfield offer great value for first-time buyers, with lower prices, excellent transport links and significant regeneration investment. These neighbourhoods in Zones 3 to 5 often provide the best balance of affordability, space and convenience for young buyers.

Steps to buying a home for the first time

Understanding the buying process helps you feel confident and prepared at every stage. Here’s what to expect:

1. Check your finances

Before you start house hunting, review your financial situation. Check your credit score and ensure you’re on the electoral roll, as this improves your creditworthiness.

 

Lenders want to see responsible financial behaviour, so pay off any debts, avoid your overdraft and don’t apply for new credit in the months before your mortgage application. Gather essential documents, including payslips, bank statements and proof of identity.

2. Get a mortgage in principle

A mortgage in principle (MIP) gives you a clear idea of your budget and shows sellers you’re a serious buyer. Your mortgage adviser will assess your income, credit history and outgoings to determine your borrowing capacity. The process is usually quick and straightforward, and having an MIP in place means you can move fast when you find the right property.

3. Search for properties

Start exploring what’s available in your preferred areas. Browse online, register your interest with developers and book viewings. When viewing properties, look beyond the current décor and furnishings to see the space’s true potential. Consider room sizes, layout, storage and natural light. Don’t rush, take your time and ask questions about specifications, service charges and what’s included.

4. Make an offer

Once you’ve found your ideal home, you’ll typically pay a reservation fee to secure the property. This takes it off the market while the legal process begins. Your Sales Adviser will explain everything in detail and ensure you understand the timeline and next steps. Don’t feel pressured to go over budget, even in a competitive market.

5. Instruct a solicitor or conveyancer

You’ll need a solicitor or licensed conveyancer to handle the legal side of buying a home. They’ll conduct searches, review contracts, liaise with the seller’s solicitor and ensure everything is in order.

 

Choose a conveyancer experienced with new build properties, as they can address specific considerations. Budget 3-5% of the property value for legal fees, surveys and other associated costs.

6. Exchange contracts and complete your purchase

Once you’ve exchanged contracts, the sale becomes legally binding. Both you and the seller will sign the contract and you’ll pay your deposit. A completion date is set, which is the day the property officially becomes yours, and the remaining funds are transferred. After this, you’ll receive the keys to your new home.

Common challenges young buyers face

Buying a home in your 20s may present some challenges, but understanding them can help you plan accordingly.

Affordability and high deposits

London property prices can seem daunting, particularly when saving for a deposit on an entry-level salary. The key is to be patient and consistent with your savings, while taking advantage of schemes designed to help first-time buyers. Consider looking in more affordable boroughs or exploring shared ownership options when buying a home.

Credit history and eligibility

Younger buyers often have shorter credit histories, which can affect mortgage eligibility. Build your credit score by registering on the electoral roll, using a credit card responsibly and paying all bills on time. Avoid multiple credit applications in quick succession, as this can negatively impact your score.

 

If you’ve had financial difficulties in the past, be transparent with your mortgage adviser. They can advise you on the best approach.

Competing in a competitive housing market

Demand for property in London is consistently high, so when you find your ideal property, you may need to act quickly. However, don’t rush into a decision before you’re ready or exceed your budget. Having your finances in order and a mortgage in principle already secured means you can move fast when the right opportunity arises.

Understanding fees and other costs

Beyond your deposit and mortgage, remember to budget for Stamp Duty (first-time buyers get relief on properties up to £300,000), legal fees, surveys, buildings insurance and ongoing costs like service charges and ground rent. New build developments often include incentives that can help with these costs, so ask your Sales Adviser what’s available.

 

Read our guide to find what new home expenses you’ll need to budget for as a first-time buyer.

Tips for a smooth first-time purchase

Following these practical tips will help buying a home for the first time go as smoothly as possible.

Work with a specialist mortgage adviser

A specialist new build mortgage adviser can be invaluable. They’ll explain your options, find the best mortgage deal for your circumstances and guide you through the application process. They know which lenders are most flexible with younger buyers and can advise on how to present yourself as an attractive candidate. The right adviser can save you time, stress and potentially money by securing better rates.

Avoid common pitfalls

Here are the most common pitfalls to watch out for when buying a home:

• Don’t overstretch yourself financially – Stick to your budget and remember that property ownership comes with ongoing costs beyond your mortgage

• Avoid major purchases on credit – Making large credit purchases before completion can affect your mortgage approval, even at the final stages

• Be thorough with inspections – Don’t let emotions override practical considerations when viewing properties

• Never skip legal checks – Your solicitor’s searches are there to protect you from potential issues with the property

Plan for the future

Even if this is your forever home, it’s wise to consider resale value. Properties in areas with good transport links, ongoing regeneration and strong local amenities tend to hold their value well. Think about what future buyers might want – good storage, parking, outside space and proximity to schools all add value.

Stay within your budget

It can be tempting to overpay for a property that ticks every box, but staying within budget protects your financial well-being. Factor in a buffer for unexpected costs and ensure you have savings left after completion to furnish your home and build an emergency fund. Remember that you can always move up the property ladder later.

 

Buying a home for the first time? Explore our range of new build homes across London and discover fantastic offers designed to help first-time buyers.

 

Contact our Sales Advisers today for tailored advice on buying your first home in London.