Buying a home is the biggest purchase that most of us will make, and it has a massive impact on day-to-day life. For many, a first home will be the place they plan to start a family or enjoy the first years of married life. It doesn’t stop there: finding bigger homes or downsizing later in life are just as much the start of a new chapter.
We want our house to be special, but there can be a danger in overstretching finances to achieve that dream. This can end up turning what should have been an exciting new chapter into a stressful one.
Most people use a mortgage to buy a home and while these come along with restrictions, it’s still possible to find yourself in over your head. In its February 2026 update, UK Finance reported that 80,490 homeowners were in mortgage arrears of 2.5% or more. Here’s a few things to consider before pulling the trigger on a home at the top of your budget.
How will repayments fit into your lifestyle?
If you’ve received a quote for a mortgage, it will tell you how much you will be repaying monthly. If you rented a property before you bought, you’ll likely have a good feel for how that eats into your budget.
Make sure the payment for the mortgage is something you can reasonably afford while still enjoying your life.
For example, if you used to rent a property for £1,000, and will now be paying a monthly mortgage of £1,200, where will that extra £200 come from? It may not seem like a lot, but that might be your budget for dinners out or subscriptions. Understand what you need to sacrifice and make sure you can still enjoy your life on the new budget.
Also remember that if you have a fixed-term mortgage, that rate will likely be changing in two to five years’ time. If interest rates are higher when it comes to finding a new mortgage deal, it means you’ll be paying more each month. Leaving a little wiggle room in the budget that would allow for an increase on your mortgage can be a helpful step.
Have you saved enough for Stamp Duty?
When you buy a home in the UK, you will be taxed for Stamp Duty. If it’s your first home and the property is being purchased for £500,000 or less, you will not be charged for the first £300,000 but will be charged 5% on the next £200,000. If the price of your home is over £500,000 or it isn’t your first time buying a home, the normal rates of stamp duty will apply.
If you used a Lifetime ISA to save for your home, know that you cannot use money from that account to pay for stamp duty. Instead, you can use money out of a Stocks and shares ISA or Cash ISA, or from other sources such as cash savings. The rules state that Lifetime ISA funds can only go towards the property deposit, for funds payable upon completion, or both.
Have you factored in other expenses and unexpected costs?
In the process of purchasing a home, you need to consider other fees including surveyance, legal, and mortgage arrangement fees.
The Homeowners Alliance estimates that legal fees for purchasing a house range from £500 to £1,150, with surveys ranging from £300 to £1,500. Disbursements, including registering with the land registry, can add another £800 to your bill. These costs can be an unpleasant surprise for those who are not ready for them after placing a deposit.
Once you move into the home, you’ll also be faced with moving fees, possibly buying new furniture, and making any renovations. By spreading these costs out over a few months and just beginning with the essential bits, you can ease the burden.
The other unexpected expense that can crop up as a property owner is issues with the home. Where a landlord may have been footing the bill for these problems in the past such as a broken boiler, now that responsibility is with you. Boosting the size of your emergency fund so you’re ready when the problem comes can remove stress.
How a Lifetime ISA can help
One of the assets that first-time buyers have is a Lifetime ISA. You can put up to £4,000 each year in this account, and the government will add in a boost of 25% of your contribution, up to £1,000. This Lifetime ISA calculator can give you a picture of how your savings might add up for a deposit over time.
These accounts do have specific restrictions. They can only be used for the purchase of a first home bought for £450,000 or less, and the account needs to be opened at least 12 months before the house purchase. Otherwise, they cannot be accessed until age 60. If the funds are accessed outside of these two scenarios, there will be a 25% penalty.
Lifetime ISAs can be a big help for deposits, but they can’t be used for other taxes like Stamp Duty or surveyance and legal fees. So, make sure that in addition to your savings here, you have other funds available for those payments.
It is worth noting that the government has indicated it will replace the Lifetime ISA with a new savings product aimed specifically at first-time buyers, potentially in 2028. Don't let that stop you from considering this type of ISA. It’s likely that existing Lifetime ISA holders will continue to use their account as normal once the new ISA product goes live.
Hannah Williford: Content Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
