Buying your first property can feel exciting and daunting at the same time – knowing where to start can also feel like challenge! That is why we are giving you some tips to help you save for your first home.
If you would like to download a full step-by-step guide for buying your first house, click here.
Now, let’s get started!
Know how much you need to save for the house you want
Make sure that you do your research and find out how much houses and flats are in the area you want to buy.
You can use our property search tool or even use Rightmove and Zoopla to see current asking prices. You can even see how much the property has sold for on the particular street or area where you want to buy. You can then calculate how much your deposit would be, whether that is 5%, 10% or more!
But, buying a house or flat isn’t just about the deposit, though. You will need to think about other costs as well, such as legal fees, survey fees and any upfront mortgage fees. Look at current mortgages and associated fees, and maybe even ask a local solicitor how much you might have to pay in fees. Total your deposit and the various fees/taxes that you may incur, and you will have the amount you are going to need to save.
Set a budget and a timeline
Sit down and list all the money you have coming in and out of your bank account. How much can you afford to save every month? You can then see how long it will take for you to achieve your savings goal. If the time period is too long, then you should consider if you can increase your earnings or make some compromises and reduce spending. We suggest eight ways you can boost your savings with cost-saving and money-making ideas below.
Reduce your costs, earn more and boost your savings
- Switch to a discount supermarket and buy supermarket own brands.
- Reduce fuel costs and cycle or walk to work – if it is too far then try lift sharing to reduce your commuting costs.
- Sell the stuff you do not use anymore – whether it is a car boot or through an online auction, your old items can earn you money and be given to a new loving owner!
- Work a little more; accept overtime, if your main job allows it, or consider a second job or freelancing in the evenings and weekends.
- Reduce your current rental costs – how much more could you save each month if you moved back in with Mum and Dad? Or can you share with a partner or friend?
- Switch to a new current account – you can now earn hundreds of pounds by taking out a new current account.
- Use a cashback site – valid purchases will then earn you money back!
- Get a cheaper deal on your mobile, broadband and utilities – this can also save you hundreds of pounds.
Find the best savings account
Here are some options on savings accounts:
A regular savings account is a good place to start building your savings fund. These savings accounts usually work on a maximum monthly payment that needs to be made every month for 12 months. Your balance starts at zero, and then increases each month.
If you have more each month to save than is allowed in your regular savings account, then consider easy access savings accounts. These allow you to add payments whenever you choose, and generally to withdraw money as and when you want – although some will have a maximum number of withdrawals that you can make. Notice accounts generally offer higher rates of interest than easy access, but you cannot access your funds immediately – instead, you will need to wait for a specific number of days before funds can be withdrawn.
Once your savings pot has grown, you can start to consider fixed rate bonds. You can usually open these from a balance of £500, however some will require a £1,000 or even £10,000 minimum deposit. Fixed rate bonds can pay more in interest but often restrict you to one initial deposit only and most will not allow you to withdraw your cash before maturity. However, if saving is a long-term goal and you have no need of early access in the first year or two, these can be attractive.
Guaranteed tax-free savings
For guaranteed tax-free savings, there’s cash ISAs to consider. However, even with non-ISA savings accounts, you can earn up to £1,000 per year interest without paying tax (if you are a basic rate taxpayer), and as ISA rates tend to be lower than non-ISA ones, it might be worth looking at these first.
Set up a regular payment on payday
We all hate bills, but we all know they have to be paid. If you treat saving like a bill by setting up a regular payment, you will soon get used to not having the extra cash in your bank account each month. Most savings accounts will let you pay in every month via a standing order or direct debit, so you will not even need to remember to make the payment. However, you will have to ensure you have got enough in your bank account on the date the payment goes out.
Keep close to house prices
House prices do fluctuate and this could mean that either you need to save more or that you could buy sooner than you expected. Make sure you keep a close eye on the market so you are not shocked by price changes!
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