When you’re buying your first property, it’s natural to start with the asking price.
You have a budget, you set your Rightmove filters, and you look for the best flat you can afford.
But here’s something that doesn’t get discussed enough: the cheapest property to buy isn’t necessarily the cheapest property to own.
A flat listed for £350,000 could cost you almost exactly the same each month as one listed for £400,000.
And the difference comes down to something buyers often underestimate: the costs that sit beyond the mortgage.
Let me show you what I mean.
Two flats. £50,000 difference. Almost identical monthly costs.
Imagine you’re deciding between two flats in London.
Flat A — £350,000
Deposit (10%): £35,000
Monthly mortgage: £1,691
Annual service charge: £4,000
Monthly service charge: £333
Combined monthly cost: £2,024
Flat B — £400,000
Deposit (10%): £40,000
Monthly mortgage: £1,933
Annual service charge: £1,500
Monthly service charge: £125
Combined monthly cost: £2,058
Both examples assume a 90% repayment mortgage, 5% annual interest and a 30-year term.
Now look at that difference.
Flat B costs £50,000 more to purchase, but only approximately £34 more per month in combined mortgage repayments and service charges.
Flat A saves you roughly £242 per month on the mortgage, but its higher service charge eats up around £208 of that saving.
That’s why I think buyers need to change the way they compare properties.
The asking price tells you how much the seller wants. It doesn’t tell you what the property will cost to own.
Of course, that doesn’t automatically make Flat B the better purchase. You would need an additional £5,000 deposit, and for an eligible first-time buyer in England, an additional £2,500 in stamp duty.
But it should make you question whether Flat A is genuinely the bargain it initially appears to be.
1. Service charges can change the entire calculation
When people see a flat advertised for £350,000, they often calculate their deposit and mortgage repayment and stop there.
But if you’re buying a leasehold flat, you need to understand the service charge.
This can cover things like building insurance, communal maintenance, cleaning, lifts, management fees and contributions to future repairs.
Some buildings have relatively modest charges. Others, particularly those with lifts, concierge services, gyms or extensive communal facilities, can be considerably more expensive to run.
A higher service charge isn’t automatically a red flag. You may be receiving valuable services in return.
What matters is whether the charge is reasonable, sustainable and justified by the condition and management of the building.
And critically, you shouldn’t just ask what the charge is today.
You should ask what it has been for the last few years.
A service charge of £2,000 that has risen sharply could be more concerning than a £3,000 charge that has remained relatively stable and supports a well-maintained building.
2. The lease length matters more than many buyers realise
Here’s another mistake I regularly see buyers at risk of making: focusing on the price of the flat without paying enough attention to how many years remain on the lease.
A leasehold property with 160 years remaining is a different proposition from one with 79 years remaining.
Why?
Because a shorter lease can affect your ability to obtain a mortgage, the property’s resale appeal and the potential cost of extending the lease.
Under the current rules, the 80-year threshold remains particularly important because of the additional valuation cost known as marriage value.
Leasehold reform is underway, but not all the changes have taken effect. Buyers shouldn’t assume that an announced reform has already removed the costs associated with a short lease.
This doesn’t mean a short-lease property is necessarily a bad investment.
In some cases, it can be an opportunity to negotiate, particularly if a lease extension is factored into the purchase.
But you need to understand the costs and the legal position before committing.
A discounted property with an expensive lease extension isn’t necessarily discounted at all.
3. The building could come with a future bill
Imagine you’ve bought your flat and settled in.
Then you discover that the building needs a new roof, major external repairs or lift replacement.
Depending on the lease and the building’s financial arrangements, leaseholders may be required to contribute towards these works.
This is why it’s important to investigate whether the building has a reserve fund, sometimes called a sinking fund.
Essentially, this is money collected to help cover larger expenses in the future.
But a reserve fund doesn’t automatically mean there is enough money available.
A building could have money saved and still face significant additional charges.
Before buying, I’d want to know:
Are any major works being planned?
Have Section 20 consultation notices been issued?
How much money is held in the reserve fund?
Is there a long-term maintenance plan?
Could I be expected to contribute towards a major project shortly after completion?
These are the kinds of questions that can make a far bigger financial difference than negotiating another few thousand pounds off the purchase price.
4. Your home is also a future asset
I believe there is real value in approaching your first home with an investment mindset.
That doesn’t mean treating the place you live purely as a financial transaction.
It means recognising that for many people, buying their first property is one of the largest financial commitments they’ll ever make.
And at some point, circumstances change.
You might need more space, move for work, start a family or decide to relocate.
When that happens, your ability to sell matters.
So I would be asking:
Would another buyer want this flat in five years?
Think about the location, transport links, natural light, layout, building condition and lease length.
Would a future buyer struggle to get a mortgage? Would high service charges make the flat less appealing? Are there restrictions on letting the property if you eventually want to retain it?
A property isn’t automatically a good long-term investment because you’ve purchased it below the original asking price.
The fundamentals still matter.
5. Compare the total cost, not just the asking price
If I were comparing two flats today, I’d assess them using five categories.
Upfront costs: Deposit, stamp duty, legal fees, survey fees and any immediate work needed.
Monthly costs: Mortgage repayments, service charges, ground rent where applicable, utilities, council tax and insurance.
Building-related risks: Planned major works, fire safety or cladding issues, maintenance requirements and reserve funds.
Lease terms: Remaining years, extension costs, ground rent provisions and restrictions.
Future flexibility: How straightforward the property is likely to be to refinance, sell or potentially let in future.
And I’d stress-test the numbers.
What if service charges rise by 20%?
What if your mortgage rate is higher when you refinance?
Could you comfortably afford the property if an unexpected building expense arose?
These are far more useful questions than simply asking whether the monthly mortgage payment fits your salary.
So, which flat would I choose?
Between a £350,000 flat costing £2,024 per month and a £400,000 flat costing £2,058 per month, I wouldn’t automatically choose the cheaper one.
I’d want to understand why the service charge is so different.
I’d compare the leases, building condition, location, floor plans and future resale prospects.
I’d also consider the additional deposit and purchase taxes, because monthly affordability and total affordability are not the same thing.
Only then could I say which one represents better value.
The best property isn’t necessarily the one with the lowest asking price. It’s the one where the price, running costs, risks and long-term fundamentals make sense together.
And that’s exactly the kind of thinking I want more first-time buyers to bring into the market.
The Buyer’s Guide
Buying your first property can feel overwhelming, especially when the information that matters most isn’t always obvious from the listing.
The Buyer’s Guide helps London first-time buyers understand the numbers, assess the risks and identify properties with genuine long-term potential.
Subscribe for practical property education, market insights and buying checklists that go beyond the asking price.
Paid subscribers can also access curated property opportunities, selected with both homeownership and long-term investment fundamentals in mind.
This article is for general educational purposes and isn’t personalised mortgage, tax, legal or investment advice. Figures are hypothetical and rounded. The comparison excludes several ownership costs and assumes a constant 5% mortgage rate for illustration.