How to save for first home
For lots of people, owning their own house is a dream. For many of us, we’ve been through the rental market. We’ve had bad landlords, that annoyance of not being able to paint walls and terrible conditions of properties. If you want to move into your own home, you will need to start a journey which could last a good few years. Getting your finances in order and working towards making that dream a reality can be hard work. However, it’s completely worth it in the long run. Let’s look at some top tips about how to save for first home.
Find your property
One of the first things to do when you want to save for first home is to find the type of property you want to move into. You probably have a job that you will want to be within commutable distance of. This will give you a number of different locations. Look into the average house prices of those towns and villages. There can be a huge change in house prices over just a few miles. Sure, you might have your sights set on a particular place but by exploring other nearby properties you can find something much cheaper and perhaps even better than you thought.
You’ll also need to think about your future too. You might be in your early 20s at the moment but is your property giving you room to grow? If a family is in your sights in the future, what are the nearby schools like? Consider other amenities like doctors, parks and shops too. You will also need to look into the average bills in your area, including council tax. Is there off-street parking or do you pay for a permit if you park on the street? There are many things to consider when you are starting to look at houses and save for first home.
Figure out how much you need to save
When you have figured out the type of property you want to buy, you’ll also be able to look at the expected price tag of that home. When you know this number you will be able to figure out the amount of money you will need to save for a deposit. Hopefully, you can get a mortgage that you will pay off month after month, but mortgage companies will expect you to have a house deposit.
This will be no less than 5% of the price of the property you are buying, however, in reality, the average house deposit is closer to the 15% mark. This means that a £300k house would have a 15% house deposit of £45k. It’s worth remembering that the more deposit you can put down in the first place, the better mortgage rates you are likely to get. You’ll also have less to pay off and a lower amount for interest rates to grow upon.
Now you know the deposit amount that you’ll need to save for first house, you can start putting things in place to actually save the cash. The amount that you will need might look absolutely unattainable right now, but if you put the work in, you will work towards that dream house of yours with every deposit that you make into your saving pot.
Set up a dedicated savings account
One of the best ways to save for first house is by having a dedicated savings account to pay into. If you are a first-time buyer you can also open a Lifetime ISA which can be used to buy your first property. You’ll earn interest on the money you put away whilst also getting a Government backed bonus if you pay into a LISA. You can find out more about opening a LISA and the benefits of this for first-time buyers here.
Many of us have savings accounts but putting the money for our house deposit in with the rest of our savings doesn’t give a clear picture of what we have available. When you are working towards a goal you need to know how you are progressing. It might seem like a reach when you first start, but when you continue to pay in regularly, you will surprise yourself at just how much you can save over a small space of time.
Make saving a priority
If this is truly your goal, you will need to make sacrifices in order to get there. Just like anything that we dream of, it is worth it in the long run but there are short-term habit changes you will probably need to put in place. You might have to say no to nights out with your friends. You might have to question whether you buy that takeaway rather than making your own meal from the ingredients in the fridge and cupboard. There are sacrifices to make, such as having a cheaper shorter holiday rather than heading abroad for a couple of weeks.
If this is your number one priority, you need to work towards it. You can still enjoy your life as you save, but you might start questioning choices before you make them. Some people move back in with their parents or downsize their rented house so they can save money to put aside. You need to look at your finances, make cutbacks, figure out how much you can save every month and then stick to your allocated budget. If there are two of you buying a home together, you need to trust each other and make saving a priority together. Work towards your target with teamwork and you will achieve those goals.
Where do you want to live? Figure that out and you can start to gather the knowledge you need for getting your plans in place. Wok out how much you will need to borrow, what your deposit will be and just how long it’s going to take you to save up the required cash. Start to save for first home and you’ll soon be in the property you can put your personalised stamp on.