How Much Can You Really Afford? A Guide to Budgeting for Your Next Home

Thinking about moving house? Whether you’re climbing the property ladder or buying your forever home, knowing exactly what you can afford is the first—and arguably most important—step.

It’s easy to focus on asking prices and mortgage rates, but the real cost of moving is made up of many smaller pieces. From legal fees to stamp duty, even the most prepared buyers can be caught off guard by unexpected costs.

If you’re not careful, stretching your budget could leave you with little left for essentials—or worse, make your dream home feel like a financial burden.

So how do you budget properly when planning your next move? This guide will help you take a practical look at your finances, so you can approach your next purchase with confidence.

Understand your total financial position

Before browsing listings or speaking to a mortgage broker, take stock of your full financial picture. That includes:

• Your savings and income
• Any existing equity in your current home
• Debts or other monthly commitments
• Your credit score and lending history

This will shape what lenders are likely to offer—and what you can realistically afford without overextending yourself.

Be honest with yourself. It’s tempting to budget based on best-case scenarios, but planning conservatively gives you more breathing space if costs go up or circumstances change.

Don’t just focus on the deposit

Most buyers understand they’ll need a deposit—usually a minimum of 5% to 15% of the property’s value.

But there’s more to it than that.

Other upfront costs include:

• Stamp duty (depending on the price and whether you already own a home)
• Mortgage arrangement fees
• Valuation and survey fees
• Legal or conveyancing costs
• Removals and storage
• Broker or adviser fees (if you use one)

Then there are moving-in costs like broadband, insurance, furniture, and fittings. These can easily add thousands to your total spend.

Use the right tools

A great way to plan for some of these expenses is with a UK stamp duty calculator. These free online tools give you a quick estimate of what you’ll owe based on the value of the home and your status as a buyer (first-time, moving, or investing).

It’s particularly useful if you’re close to one of the price thresholds, where even a small increase in offer could mean a much higher stamp duty bill.

Alongside that, use mortgage calculators to test different scenarios—e.g., if interest rates rise, or if you want to shorten your loan term. This helps you future-proof your budget and make sure repayments will still be comfortable down the line.

Know what lenders consider

Mortgage lenders use their own affordability models. They typically look at:

• Your income and employment status
• Your monthly outgoings and credit history
• Loan-to-value (LTV) ratio
• Debt-to-income (DTI) ratio
• Type and location of the property

Even if your deposit is strong, your credit score or existing debt can affect what you’re offered—or whether you’re approved at all.

Many lenders will offer a decision in principle (DIP), which gives you a rough idea of what you might be able to borrow. This can be helpful when planning viewings or making offers.

Consider ongoing monthly costs

Owning a home means more than just paying a mortgage. When setting your budget, remember to factor in:

• Council tax
• Utility bills (gas, electricity, water)
• Service charges or ground rent (if leasehold)
• Buildings and contents insurance
• Maintenance and repairs
• Commuting or travel costs

These vary widely depending on location and property type. A detached house in the countryside may have higher heating costs, while a city flat might come with service charges and parking fees.

Take time to assess the full cost of living in the type of home—and area—you’re considering.

Don’t forget the future

It’s easy to budget for today. But what about a year from now? Five years? Ten?

Think about your future plans:

• Will your family grow?
• Are you planning to change jobs?
• Could your income change?
• Might interest rates rise again?
• Will you need to fund renovations or school fees?

Planning ahead ensures you don’t outgrow your budget—or your home—too soon. If you’re buying your forever home, it makes even more sense to choose something that suits your long-term lifestyle, not just what works for now.

Tips for sticking to your budget

1. Set a ceiling—and stick to it

It’s easy to fall in love with a property just outside your budget. But remember: monthly repayments, upkeep, and unexpected costs can turn that dream home into financial stress.

2. Factor in wiggle room

Don’t max out your borrowing just because you can. Give yourself some margin for emergencies or future changes in your income or expenses.

3. Get quotes in advance

For removals, legal work, surveys, and mortgage fees—knowing what to expect prevents surprises and helps you compare providers.

4. Avoid short-term temptations

Introductory mortgage deals can look attractive, but always check what the repayments will be after the fixed term ends. Plan for the long haul.

What if you’re upsizing or downsizing?

If you already own a home, budgeting also involves understanding your equity position—that is, the value of your home minus what’s left on your mortgage.

This will help you:

• Understand how much deposit you’ll have for the next home
• See what kind of mortgage you’ll need
• Budget for the stamp duty, fees, and legal work

Your current home may be worth more than you think—or less, depending on recent market changes. Before making any big decisions, it’s wise to get an accurate valuation from a local estate agent or an online tool.

Final thoughts: start smart, stay realistic

Moving home is one of life’s biggest financial decisions. Whether you’re buying your first flat, moving for more space, or buying your forever home, your budget sets the tone for everything that follows.

Take time to understand the full picture. Use tools like a UK stamp duty calculator. Be realistic about costs. Plan for the future, not just the present.

Most importantly, don’t rush. Getting your finances in order now will help you move forward with clarity—and make sure your next home is one you can truly enjoy without worry.