“I Don’t Know Where to Start” - A First-time Buyer Case Study…

When Rachel first got in touch with her adviser, she was 26, renting, £20,000 saved, a decent job in sales, and a feeling that she was getting nowhere.

She wanted to buy. She just wasn’t sure if she could, or whether now was even the right time.

Sound familiar?

Rachel's situation isn't unusual. It's one of the most common conversations young people have at the start of their homebuying journey.

Where Rachel Started

The first thing her adviser looked at was the full picture. Property prices in and around the capital mean the goalposts are further away. That's not a reason to give up, it's a reason to start earlier, save smarter, and plan for making every pound do something useful while it waits. Rachel was aiming for a property in the region of £480,000. Once you added a 10% deposit of £48,000 with the other costs of buying and stamp duty, her real target came to around £62,000. She already had £20,000 saved, leaving a gap of £42,000 to close.

The Big Question: Save or Invest?

This was the question Rachel kept coming back to, and honestly, it's the one almost everyone asks.

The honest answer is: probably both. But in the right proportions, for the right reasons.

Here's how Rachel and her adviser thought things through:

Her deposit pot - the money she was actively building towards a purchase, needed to stay in cash. This is because markets go up and down, and the last thing you want is to watch your deposit drop 20% the year you want to buy. Cash is boring but cash is also safe for a specific short-term goal like a deposit. Money that had nothing to do with the property purchase could afford to work a little harder.

So, the money was split 2 ways. Rachel has £1,500 of disposable income after rent, bills and lifestyle.

A Cash ISA for the core deposit savings: protected from tax on the interest, accessible when she needed it, and with rates in a decent place currently. She needs to save around £1,200 a month to reach her target goal in 3 years.

A Stocks & Shares ISA for a smaller portion of she could afford to leave alone, invested into a low-cost, globally diversified fund. A sensible, patient approach that historically outperforms cash over five or more years. Because, the earlier you start, the more options you have. Rachel has £300 spare to invest.

It's also worth knowing about the Lifetime ISA (LISA), a popular option for many first-time buyers under 40. It comes with a 25% government bonus on contributions of up to £4,000 a year, provided the money goes towards a first home worth £450,000 or less. In Rachel's case, her target property price of around £480,000 put her above that threshold, so a LISA wasn't the right fit for her, but for buyers targeting a lower purchase price, it's worth checking out.

The split wasn't 50/50. It was weighted heavily towards cash, because the deposit was the priority. But having even a small amount invested meant Rachel's money was working on two tracks, one for the home and one for everything that comes after it.

The lesson: It's not cash or investing. It's understanding which money is for what, and making sure each pot is doing the right job.

Should She Keep Renting or Buy Sooner?

The other question on Rachel's mind was whether she was just throwing money away renting.

Honestly? No.

In Rachel's case, buying immediately would have meant a smaller deposit, a higher mortgage rate, and stretched monthly repayments on a London property. The maths didn't stack up yet.

So, in Rachel’s case, the sensible approach was to keep renting, keep saving, and use the next few years well.

Understanding the Real Costs

When Rachel first thought about buying, she figured she needed about a 10% deposit and a little extra.

The reality is you need a bit more. So, the adviser walked her through the full picture:

·       Deposit

·       Stamp duty (potential for first-time buyer relief)

·       Solicitor/conveyancing fees

·       Survey

·       Mortgage arrangement fee

·       Moving costs + first home essentials

In London, it is a lot. But going through the list gave Rachel something she didn't have before, some real numbers. Not a vague, scary, abstract goal. A specific target she could plan backwards from.

The lesson: Know your real number. Vague goals stay vague. Specific ones get hit.

What About Stamp Duty?

Stamp duty is worth understanding, because it catches people out.

As a first-time buyer in England, you may be entitled to Stamp Duty Land Tax (SDLT) relief. At the time of writing, this means paying no SDLT on the first £300,000 of a property's value, provided the purchase price does not exceed £500,000. Any amount between £300,001 and £500,000 is charged at 5%. Tax rules can change, so it's important to check the latest position before purchasing.

On Rachel's target of around £480,000, that means stamp duty was charged on £180,000 at 5%, so £9,000. This gave her a numerical goal to reach.

Where Rachel Is Now

Rachel is just over a year into her plan. She's on track with her savings plan and is enjoying the process. What changed for Rachel wasn't the numbers themselves, it was having a plan. Once the steps were clear, the process stopped feeling scary.

The Takeaway

If this sounds like you, the first step isn’t committing to buy. It’s getting clear on your numbers, your time horizon, your options, your real costs, and what a realistic plan could look like. Talk to a mortgage broker. Look at your ISA allowance. Work out your savings plan, not just a vague deposit figure. When you start having the right conversations, you start feeling less overwhelmed.