First time buyer’s guide to purchasing a home in London

Key Takeaways

• Getting a mortgage in London. The first step for most first time buyers is securing a mortgage. There are many types of mortgages available, such as fixed-rate and variable mortgages. Borrowing amounts are typically linked to income and existing financial commitments, although criteria vary between lenders.

• Deposit amount. A larger deposit can sometimes lead to lower mortgage rates. The average deposit for first time buyers in London is generally higher than the rest of the UK.

• Upfront costs. There are many upfront costs associated with buying a home, alongside the deposit.

Understanding what it means to be a first time buyer

A first time buyer is someone who has never owned a residential property, either in the UK or abroad. This applies to both freehold and leasehold properties and is the standard definition used for government schemes and first time buyer incentives, such as the First Homes scheme.

If you’re a joint buyer (buying with someone else), all applicants must meet the first time buyer definition to qualify for most government schemes and first time buyer incentives.

Key steps before applying for a mortgage

Before submitting a mortgage application, many people choose to review their financial circumstances and gather relevant information.

Check your credit report and improve your financial standing

Before applying for a mortgage, it can be useful to understand how lenders may view your financial information. Reviewing your credit report can highlight details that might be considered as part of your application, such as payment history. Credit files can be checked through UK credit reference agencies, including Experian, Equifax and TransUnion.

Factors that are often reviewed when looking at a credit profile include:

• Whether the information on the credit report is accurate, up to date and if any discrepancies need to be queried.
• How consistently regular commitments, such as credit agreements, utilities and phone contracts, have been paid.
• The level of outstanding borrowing, particularly higher‑interest balances.
• The number of recent credit applications recorded over a short period.
• Whether electoral roll information is present, which can help lenders confirm your identity and address details.

Determine how much you can borrow

When thinking about where to live in London, it can be helpful to have a general sense of how much you might be able to borrow. In the UK, mortgage lenders often use income multiples and stress testing to determine your current and future affordability. However, approaches and limits can vary by lender and by applicant.

When considering how much to lend you, providers usually look at a range of factors, which may include:

• Existing debts, such as loans, credit cards or car finance
• Regular outgoings, spending patterns and living costs
• Credit history and other financial commitments
• Personal circumstances, including your employment type and whether you have any dependents

Having an early indication of your potential borrowing range can make it easier to plan budgets and explore areas or property types that better align with your circumstances.

Saving for your deposit

Many mortgage lenders look for a deposit of around 10–15% of a property’s purchase price, although requirements can vary.

For example, on a £150,000 home, a 10% deposit would be £15,000, with the remaining 90% covered by the mortgage – often referred to as the loan‑to‑value (LTV) ratio.

Some lenders may consider deposits as low as 5%, and there are also specialist products, including 100% mortgages, available to buyers who meet specific eligibility criteria.

To support deposit savings, some first time buyers use government‑approved ISAs, such as Lifetime ISAs. These accounts can include a government bonus toward a first home deposit, subject to eligibility rules and property price limits.

How long it takes to save for a house deposit can vary widely depending on your income, living costs and individual circumstances. On average, first time buyers in London tend to spend several years building a deposit, often longer than buyers in other parts of the UK, largely due to higher house prices and larger typical deposit sums.¹

Upfront costs when buying in London

Alongside your deposit, there are several upfront costs that you may need to budget for when buying a home in London. These can add up, so factoring them in early can help avoid surprises during the buying process.

Some first time buyers find that these costs and short‑term overlap expenses, such as paying rent and a mortgage at the same time, can be higher than expected. Budgeting a contingency fund can help you cover any unexpected expenses.

Choosing where to live in London: key factors

When considering where to live in London, people often look at both affordability and lifestyle factors. Budget can influence which areas feel achievable to buy in, while personal priorities may play a role in how suitable a location feels over time.

Factors that are often considered include:

• Commute times and transport links, such as Tube, rail and bus access
• London transport zones, which can influence both property prices and ongoing travel costs
• Local amenities, including shops, schools, green spaces and healthcare services
• Lifestyle preferences, for example, whether a busier central area or a quieter suburb feels like a better fit
• Regeneration areas, where planned investment may affect local amenities and longer‑term property demand

Spending time considering your practical needs alongside your preferences can make it easier to identify areas that align with both your finances and day‑to‑day living.

First time buyers often explore areas that combine lower property prices with reasonable transport connections. This can include outer zones and neighbourhoods associated with regeneration projects or new transport links, although your preferences and choices may vary depending on your individual circumstances.

Understanding mortgage types

For many first time buyers in London, purchasing a home involves taking out a mortgage. A mortgage is a loan from a bank or building society that typically covers part of the property price, with the remainder funded by a deposit.

A range of mortgage products are available. Some of the types commonly considered by first time buyers include:

• Fixed‑rate mortgages. The interest rate stays the same for a set period, often two, three or five years. This means your monthly payments remain unchanged during that time.
• Variable mortgages. These include interest rates that can change over time. This includes standard variable rate (SVR) mortgages, where the lender sets the rate and monthly payments can increase or decrease over time.
• Tracker mortgages. A form of variable mortgage that accrues interest based on the Bank of England base rate, plus a fixed margin set by the lender. Your monthly payments move in line with changes to the base rate.

Some first time buyers opt for repayment mortgages, where monthly payments go towards both the loan amount and the interest. Others choose interest‑only mortgages, which involve paying only the interest each month and require a separate arrangement to repay the original loan at the end of the term.

Individual preferences can vary, so the suitability of any mortgage type depends on factors such as personal finances, future plans and comfort with potential interest rate changes.

Affordability and budget planning

Careful budget planning can help keep your mortgage payments manageable alongside everyday living costs.

Before applying for a mortgage, you may consider these affordability checks:

1. Debt‑to‑income ratio. Lenders compare your total monthly debt commitments against your income to assess how much room you have to take on a mortgage.
2. Stress‑testing mortgage repayments. Mortgage providers assess whether you could still afford your payments if interest rates were to rise. You can run your own calculations at higher rates to help you plan.
3. Building an emergency buffer. You may want to retain enough savings to cover several months of essential expenses, including your mortgage payments. This safety net can help protect against unexpected costs or changes in income.

According to ONS affordability data, London remains the least affordable region in England, so affordability planning and budgeting can be helpful for first time buyers in the capital.²

Alongside your mortgage, budgeting for council tax, utilities, transport, food, insurance, maintenance and lifestyle costs can be helpful.

Timeline of buying your first home in London

Buying your first home in London can take several months from start to finish. While every purchase is different, most first time buyers follow a similar set of steps:

1. Property search and viewings
2. Make an offer and get it accepted
3. Apply for a mortgage
4. Conveyancing and surveys
5. Exchange of contracts
6. Completion and move‑in

Common challenges for first time buyers

Buying your first home in London can come with hurdles. It can be helpful to understand some of the most common challenges to plan ahead.

• Affordability pressures. Higher property prices and larger deposit requirements can make buying your first home in London more challenging.
• Strong competition. Popular areas can attract multiple bidders, meaning homes can sell quickly and above the asking price.
• Credit history issues. Limited credit history, missed payments or existing debt can affect your mortgage options or interest rates.
• Unexpected costs. Fees for surveys, legal work, moving and ongoing maintenance are sometimes underestimated by first time buyers.

Expert insight: guidance from financial specialists

An expert from Barratt London said:

‘Mortgage brokers and financial planners consistently advise first time buyers to get clear on affordability before property hunting. This means reviewing credit reports early, understanding the true cost of homeownership beyond the mortgage and securing a Decision in Principle (DIP) to strengthen your position when making an offer.’

‘A qualified broker can help identify suitable mortgage products, explain trade‑offs between rates and terms, and ensure the loan remains affordable under potential interest‑rate changes – helping first time buyers make confident, informed decisions from the outset.’

Ready for next steps?

Explore our range of new homes in and around London, with various offers to help you move. Check our T&Cs to see if you’re eligible for first time buyer schemes.

Call or visit our Sales Advisers at your nearest development to find out more.

Disclaimer:

This article is for general informational purposes only and does not constitute mortgage advice. We would always recommend that advice is taken from a regulated mortgage adviser regarding your specific circumstances.

References:

1. https://www.standard.co.uk/homesandproperty/property-news/london-first-time-buyers-home-deposit-b1267208.html ↩
2. https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housing-affordability-in-england-and-wales/2025 ↩