Are you desperate to own your own home but can’t imagine how you’ll ever have enough savings to afford to buy your first property?
Buying your first home is a huge, long-term financial investment. The good news is, it is possible to get a mortgage deal with manageable monthly repayments, but this does come at a cost – in most cases, you’ll need to have a decent amount of savings upfront to help you get the best deal.
Not sure how to get started? Well, here’s my guide to helping you save for that all-important house deposit.
How much do you need to save?
This should be your starting point, which will help you establish a clear goal for your savings.
For the average house deposit, you will need to have around 10-20% of the home’s value in savings. This may even rise to 25% - if you want to get the best mortgage deals.
Yes, this does sound high, but don’t let it put you off. It is achievable!
Government help for first-time buyers
You could opt to take advantage of one of the government schemes available to first-time homebuyers. Some of these require a smaller percentage of house deposit, reducing how much money you need to save and the length of time needed to achieve it.
Your options include the much talked about Help to Buy and the shared ownership schemes. They are worth considering, but always delve into the detail to establish if it’s right for you.
Time for some cutbacks.
Review your monthly outgoing spend vs your monthly income and identify where you can make some savings. Perhaps cut back on some of the luxuries in your life, like eating out and take-aways. Reduce your nights out – you can still see friends without spending loads of money.
Remember – small cutbacks can make a big difference. And, it can seriously improve your chances of getting a mortgage.
Don’t forget the hidden costs!
On top of your house deposit, you will also need to have enough money saved to be able to pay for solicitor fees, a property survey, stamp duty and many of the other costs related to buying a home.
In other words, don’t stop saving once you’ve reached your target. Continue saving for that little bit extra, to give yourself a buffer.
Move back in with family
This is a very common option for many people, who desperately want to save enough to be able to buy their own place.
Think of it as a means to an end. It’s only temporary and could really help to increase your savings far more quickly.
Find cheaper rental accommodation
If living at home with parents isn’t an option, you should consider finding cheaper rental accommodation, if at all possible.
Reduce your energy bills
If you are a bill payer, make sure you are on the best possible energy deal, and broadband deal too.
It’s never been easier to find and switch to a better energy deal, which can save on your monthly outgoings. You can start now and start saving today.
Maximise your savings
Are your savings in a lifetime ISA? An instant access savings account? Or, a regular savings account?
Do your research to work out what’s the best way for you to store your savings that will help you on your way to buying your first home.
Ask your family for financial help
This option is usually a last resort and for some not an option, but if it is, don’t rule out the Bank of Mum and Dad.
If your parents have the financial means and the desire to help you, you should seriously consider their offer. There are different ways they can provide you with this financial support, so think about the option that’s most comfortable for you.
Find your first home
Getting an idea of what you would like to buy, and how much you can afford, will assist you in your mission to raise the deposit needed for a mortgage.
If you have a rough idea of how much you need to save each month and a clear plan of how you’re going to achieve this, then you’ll be that much closer to buying your first home.
Need further advice?
To access step-by-step guides and checklists, and tools, designed to help first-time buyers as well as to save you time and money, sign up to Move iQ for FREE – there are also a range of member rewards for you to access.
Whether you’re buying, renting, selling, moving or owning, Phil Spencer shares his
property advice on his website, www.moveiq.co.uk, his Move iQ YouTube Channel www.youtube.com/c/moveiQ, and on The Move iQ Podcast.