Deciding to take your first step onto the property ladder can be daunting. Whether you’ve been living at home and are looking to make your own way for the first time, or have spent a few years renting, owning a house is a completely new experience.
It can take years – if not decades – to save up for a house of your own. House prices seemingly rise monthly, meaning the amount of deposit needed is increasing year on year, while salaries tend to say around the same level. And when life takes over, saving can be an uphill struggle that many can’t seem to reach the summit of. However in order to help you along, we’ve put together some top tips for saving for your very first house:
Find out how much you need
Deposits are usually 10% of the total asking price, but if you can pull together more, your monthly mortgage repayments will be less as you’ll need to borrow less money to make the purchase. Doing a quick online calculation of how much you need to get the house of your dreams will keep you focussed. With a goal in mind, you’re much more likely to save – even when temptations such as big nights out, expensive holidays and new technology arise.
Write down all your outgoings and cut out unnecessary spending
It may sound obvious, but this is the easiest way to get your savings on track. Thanks to debit cards becoming an increasingly popular way of paying for goods, many people don’t actually realise how much they spend. Paying for lunch here, buying a drink there and grabbing that must-have sale item soon mounts up. Analysing your incomings and outgoings over the last few months will help you to highlight where you spend your money, and where you can cut down on unnecessary expenditure. Avoiding meals out can save you around £100 per month for example if you eat out once a week, while giving up something simple such as a daily coffee on your way to work can save you more than £900 a year.
Set up a standing order, linked directly to a savings account
Many of us have every intention of saving a couple of hundred pounds a month, yet very few of us actually manage to do it. Birthdays, events and spontaneous trips often mean that by the time the end of the month comes around, we’re down to our last £10 and haven’t saved a penny. Setting up a standing order for the day after you get paid will help to put your finances in order. You’ll get used to budgeting for the month after your saving deposit has been taken care of, so your good intentions won’t be pushed down the list of priorities as your available cash dwindles.
Consider a high interest savings account
If you’re hoping to save a lot of money, try looking at ISAs or higher interest savings accounts. It can be difficult at present with interest rates being quite low, however these will always give you more than a generic savings account. Don’t be fooled into sticking with your existing bank either; shop around for the best rates in order to maximise your savings. Likewise, the government Help to Buy scheme is still in full force, so is worth a look too. It offers you the chance to receive up to £3000 back in tax free cash when you complete a purchase.
Think about your current housing arrangements
If you still live at home, you’re in a prime position to save money. Although it can seem like you’re the only one, the chances are you’re not. Many people live with their parents right up into their thirties nowadays, so believe us when we say you are not alone. Saving as much money as possible while at home is the fastest way of building up a really good deposit fund. After all, it really is true that there’s nowhere cheaper than home – so make the most of it.
However if you live in rented accommodation, think about whether you really need to live there or whether you can downsize. Although it may be nice to live in the heart of the city in a two bedroom apartment, if it’s just you, or even you and your partner, you don’t need two bedrooms in the interim. And the chances are, you don’t need to live around the corner from your favourite hangout. Downsizing, or moving a bit further out, can save you a couple of hundred pounds every month. And although it might seem like a drastic option and you may feel cramped initially, you’ll reap the benefits when you buy your own place.
Sell the stuff you don’t need
We’re all guilty of having items lurking around that we don’t use. Sending these to another home will not only give you more space, but you’ll also bank some cash too. And you might even realise you don’t need as big a house as you first thought!
Do you have any tips for first-time buyers saving for their first home?
