Step 4: Budgeting, eligibility and costs


As responsible lenders, we want to make sure you’re comfortable with the amount you’re borrowing for your first home.

If you’re currently renting you’ll already be used to budgeting for different household costs such as utility bills, shopping and insurances.

We base your borrowing amount on how much you earn, what regular payments you make and your day-to-day living expenses.

We’ll also take other factors into account, such as whether you’re buying on your own or with someone else.

How much do you spend each month?

From groceries to petrol and holidays to clothes you can build up a picture of how much you spend. So use our handy budget planner to help you work out how much you spend each month.

How much could you borrow?

We need to make sure that you are able to keep up payments, so before you can look at exactly how much you might be able to borrow to buy a property, you need to make sure that you are eligible to take out a mortgage.

You must be over 18 years old and a UK resident to apply for a mortgage. When we are checking to see if someone is eligible to take out a mortgage we look at things like:

  • Is the amount you earn enough to make payments on the amount you want to borrow?
  • You must be able to provide confirmation of all types of income.
  • How much outstanding debt do you have?
  • How much do you want to borrow compared to the value of the property? (This is known as the Loan to Value ratio or LTV)
  • How good is your credit rating?
  • Have you ever missed payments on any credit commitments?
  • Do you have any County Court Judgements or Individual Voluntary Arrangements (IVAs)?
  • Have you ever been bankrupt?
  • Do you want to borrow on an interest only basis?

Our 'How much could I borrow?' calculator can give you an idea of how much you could borrow, based on your earnings and spend each month. It can then show you how much your monthly mortgage payments might be for the mortgages we offer.

In our branches, you can also speak to an adviser, who’ll ask you a few questions to give you an indication of how much you could borrow.

Remember the bigger the deposit you pay, the less money you'll need to borrow, and the better mortgage deal you're likely to be offered.

Credit ratings

Another, vital, part of being able to apply for a mortgage, once you have checked that you meet the eligibility criteria and can afford payments, is having a good credit rating. All lenders use a credit rating system to see how people have managed their money in the past, looking at, for example, whether they have made payments on time or gone over their borrowing limits.

There are also a few ways to improve your credit rating:

  • Check your credit file. There are three main credit reference agencies: Experian, Equifax and Callcredit. You can ask them for a copy of your credit file so that you can check its accuracy. Contact the agency if you see any details are wrong so that they can correct them for you.
  • Register to vote – you may find it more difficult to get credit if you’re not on the electoral role.
  • Cancel any unused credit cards or bank accounts. Unused credit cards can push up the amount of available credit you could have and could reduce your credit score.
  • Keep your credit card and loan debts as low as you can.
  • Never miss or be late for payments – this will reduce your credit score.

Other costs

There are a number of costs to factor into buying a property other than your monthly mortgage payments. Some of them are listed here, but you should also check with your mortgage provider, solicitor/conveyancer and surveyor, to get an accurate picture of the one-off costs for buying your first home.


Product fee


We offer a range of mortgages which have no product fee.

Mortgages with product fees usually carry a lower rate of interest during the initial product term. Product fees can often be added to your mortgage but that means that you pay interest on the product fee unless it is repaid within 21 days of completing on your mortgage.




A valuation fee is normally charged as part of the mortgage process. It makes sure that the property is worth the amount of money you’re borrowing.




Surveying firms in the UK are governed by The Royal Institution of Chartered Surveyors, or RICS. There are a number of RICS surveys, and costs vary depending on which type you want. The RICS HomeBuyer Report is cheaper than the more detailed RICS Building Survey, for example. Talk to a licensed surveyor to figure out what type of survey would be best for the property you are looking at buying, and remember that paying a little extra on a survey before you buy could save cost on potential unpleasant surprises once you have moved in.


Legal/conveyancing fees


The administrative legal work around transferring ownership of a property from one person to another is known as conveyancing. You will need a solicitor or a licensed conveyancing firm to help with this. Always get a quote upfront.

Solicitors or licensed conveyancers also carry out searches on the property, to check, for example, whether there are plans to develop new roads nearby. These will normally be covered in the conveyancing costs, but it’s best to check exactly what the fee includes.


Stamp duty


You must pay Stamp Duty Land Tax (SDLT) to HM Revenue and Customs if you buy a property over a certain price in England and Northern Ireland.

When you’re buying your first home, you get a discount (relief) which means you pay less or no tax as shown in the table below, if:

  • you complete on your mortgage on or after 22 November 2017;
  • the purchase price is £500,000 or less; and
  • you, and anyone else you’re buying with, are first time buyers.


Purchase price Rate of SDLT payable (purchase price £500,000 or LESS)
£0-£300,000 0%
£300,001-£500,000 5%


Or if the purchase price is over £500,000 you pay tax as shown in the table below.


Purchase price Rate of SDLT payable (purchase price over £500,000)
£0-£125,000 0%
£125,001-£250,000 2%
£250,001-£925,000 5%
£925,001-£1,500,000 10%
Over £1,500,000 12%

SDLT is charged at the rates shown above, based on the amount of the purchase price that falls in each rate band. Learn more about stamp duty
Correct at 19 November 2018.

Please note, this differs if you’re buying in Scotland, where there is a Land and Buildings Transaction Tax, or if you’re buying in Wales where there is a Land Transaction Tax


Removal costs


Don’t forget you may want to employ a removal firm to help you move into your new home – costs can vary so get a few quotes so you can compare prices. It’s really important to get the right removal service for the right cost. A few points to check are: does the price include packing? Does it include insurance? What is the capacity of the van provided? Is access suitable?


Account fee


The account fee is charged by us for providing and administering your mortgage. It is payable on completion, however you can defer this fee until the end of your mortgage.

Important Information


All applications are subject to status and our lending criteria. This means that the amount we’ll lend you will depend on your individual circumstances, the type of property and the amount you borrow. For example, we may require a bigger deposit if you’re buying a flat or new build property.