Setting your budget

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Before you begin browsing property listings or booking viewings, it’s essential to take a step back and set a realistic, well-informed budget. Establishing your financial boundaries early on helps you focus your search on homes you can genuinely afford, and avoids disappointment or unexpected financial pressure further down the line.

This section will walk you through the key factors that go into setting your home-buying budget, including how much you can borrow, the other costs involved, and how to stay within a comfortable financial range.

Key components of your home buying budget

When you’re thinking about how much you can afford to spend on a home, it’s not just the deposit or the monthly mortgage payments you need to consider. A realistic budget accounts for all the associated costs of buying and moving.

Here are the main elements to include:

  • Your deposit: This is the upfront sum you’ll put toward the purchase price of your home. Most lenders in Scotland require a minimum deposit of 5 percent; though a deposit of 10 percent or more can open up better mortgage rates and more borrowing options. The larger your deposit, the more favourable your loan-to-value ratio will be.
  • Monthly mortgage repayments: Mortgage calculators are a useful tool for estimating how much you’ll pay each month at different interest rates. Try out a few scenarios based on various property values and term lengths so you know what to expect before committing to a specific price range.
  • Legal and moving costs: These include solicitor fees, LBTT (Land and Buildings Transaction Tax), valuation fees, removal costs, and furniture or appliance purchases. It’s wise to budget a few thousand pounds for these combined expenses; some fixed, some variable depending on the property.
  • An emergency buffer: Unexpected costs do come up; whether it’s a boiler needing attention, temporary housing overlap, or a delay in moving in. Building a buffer into your budget gives you peace of mind and financial flexibility during what can be a high-pressure period.

How much can you borrow?

Most mortgage lenders will offer to lend between 4 and 4.5 times your annual income, although this depends on several factors:

  • Your credit score and repayment history
  • Any existing debts or financial commitments
  • Employment type and income stability
  • Whether you’re buying alone or with a partner

Keep in mind that borrowing the maximum amount you qualify for might leave little room in your budget for future changes in circumstances; such as a change in job, a growing family, or rising interest rates.

Helpful tools to use

There are a few simple tools that can help you clarify your budget early on:

  • Mortgage calculators estimate your potential repayments under different interest rate and term scenarios.
  • Affordability checkers are used by lenders to assess how much you’re realistically able to borrow based on your income and spending.
  • You can also apply for a Mortgage Agreement in Principle, which gives you an informal indication of how much a lender is willing to offer. This can guide your budget and strengthen your credibility when making an offer on a property.

Don’t forget about LBTT

If you are a first-time buyer in Scotland, you don’t pay Land and Buildings Transaction Tax on the first £175,000 of the property price. This can reduce your upfront costs significantly and give you more flexibility within your deposit and legal fees budget. For more accurate figures, use our LBTT calculator to model different property prices.

Be realistic, and stay comfortable

It’s natural to want the best home your money can buy, but stretching to the top of your budget can leave you financially restricted. Try to aim for a price point that gives you some breathing room; not just for the mortgage, but for ongoing living costs and savings goals. A home that fits your life now and allows space to grow is often a better long-term decision than one that tests your limits.