Top saving tips for first-time buyers
Taking those all-important first steps onto the property ladder is an exciting moment. Having your very first home allows the opportunity to put your own personal stamp on the place, which is an adventure in itself. But before the paint brushes and the flatpacks arrive, a lot of hard work and sacrifice goes into achieving such a goal.
For many of us, it is saving up enough for a deposit that feels like the biggest challenge. With house prices on the rise, and many lenders offering only 85% loan to value mortgages and below, saving for a house deposit in the current climate can feel out of reach. That being said, there are some handy tips and tricks which could just get you into that dream-home sooner than you think.
Make a plan
Just like with any goal, to buy your first home you will need to make a plan. Getting organised and putting your strategy down on paper can be fun, particularly when this is such a unique project to be working on. The first step you should take is to have an honest and frank look at your budget. Are you looking for a 2-bedroom apartment in the city or perhaps a forever-home in your local village? Depending on the property style, and cost, you can now plan exactly how much money you will need to save for your deposit. When formulating this initial target, it’s also important to remember additional added costs such as legal fees, any up-front mortgage fees and any work that may need doing to the property. Once totalled, you have your full target sum ready to go.
After the budget is finalised, you will then need to work out how much time it will take you to get there. Take into account your earnings, any potential bonuses, your monthly expenditures to work out how much you can afford to save each month. Once you have the plan, you now have a clear strategy and direction towards buying your very first home.
Assess your current situation
Before starting to save up, it could be worthwhile assessing your current living situation. Perhaps your rent is higher than you’d like, and you could move into a more affordable place as a short-term solution to enable you to save more money each month. Alternatively, if you’re working from home, consider the option of moving in with family.
Cut down your spending
Though many of us like to think we are financially savvy, it’s very rare that a quarterly or even yearly review of our personal finances is undertaken. Taking a real look at your excess spending can highlight a world of saving possibilities, whether that’s cutting down on takeaways or walking more and Uber-ing less. There are many cost-reducing strategies that you can easily apply to be able to increase your savings. Considering making your coffee at home and cooking more as opposed to ordering food is a great way to keep a tighter budget.
Try switching to discount supermarkets and cut down on the subscriptions you no longer use. Having a no-spend month where only essentials are purchased may seem difficult, but it could have a hugely positive impact on your finances which could in turn then make your target feel more attainable.
Consider shared ownership
Unlike what the name suggests, shared ownership doesn’t mean sharing your home with others. Shared ownership schemes are offered by a range of housing associations across the country as a means to support those that aren’t able to save the required amount for a house deposit. The scheme offers those that can’t afford to buy on the open market the opportunity to buy a portion of a home, with the rest being owned by the housing association.
One of the biggest benefits of shared ownership is that buyers don’t need to secure a huge deposit compared with a traditional mortgage. The minimum shares a buyer can purchase is 25% and the maximum at the point of original purchase is 75% which in theory means that the buyers could need as little as a 5% of a 25% deposit, reducing the strain of saving.
Earn some extra money
Another option to help with saving for a property is looking for opportunities to earn an additional income. Try starting a side business which you are passionate about, for example baking cakes, or simply sell items you no longer use to further boost funds.
Set up an ISA
Finally, ensure that the money you’ve put aside is going into a secured savings account that adds a little extra to your amount each month. Many banks have great options for first-time buyers through higher interest rates and better mortgage-related opportunities. Simply have a look on the market, consult with a financial advisor if you have any doubts and set up your standing order.