How to Save to Buy Your First Home
How to Save to Buy Your First Home
There are some scary statistics out there around the average age of a first home buyer and how much we need for a deposit. The average age of a first time buyer is now in their thirties. Often by the time we reach this age, we aren’t looking to buy ‘a starter home’ just to get on the property ladder.
When buying for the first time in our thirties or forties we want THE house or at the least a home suitable to raise a family. We may want a home to entertain friends and space for our hobbies. Whatever we are looking for, the purpose of our home is usually different to what the requirements were ten years before.
This means we need to spend more on a house nowadays as a first time buyer than if we were 20 looking for a flat to start us off. Thus resulting in needing a bigger deposit.
Here’s our top tips for how to save to buy your first home without feeling like you’re missing out on anything along the way…
Set your goals
When saving for a house it can feel like a never ending task if you haven’t got an objective or deadline in mind.
Figure out what budget you would have to buy a property and then take some time to have fun looking at properties online and see what the house you would love to live in.
Knowing how much your dream house will cost you will allow you to discover how much deposit you would need to save. From this you can set a monthly savings goal and a give yourself a deadline.
For instance, if you know you want to save £30,000 for your deposit and you want to buy a house in 3 years with your partner, you would each need to save £400 a month.
If the saving figures you create make you feel uncomfortable and are not realistic then you can always extend your savings time to an extra year or two.
Improve your credit rating
Checking out your credit rating before you start applying for mortgages will give you a headstart on any issues that could potentially come up later down the line.
It’s a good idea to check your credit rating and work on making you become irresistible to lenders for when the time comes to apply for a mortgage.
Find our top 7 ways to improve your credit rating here.
Set up a standing order
It’s easy to forget to put money into your savings each month so start by opening a separate savings account. Then have fun with the name, choosing something related to what you want or where you want to buy house, for example, ‘Dream Seaview House Deposit’. Seeing that title will act as a positive anchor to really fuel you to continue to add to the funds because you make it real and envisage living the lifestyle attached to your house.
Having a standing order each month will allow the funds to continue to grow just in case you forget to do it manually each month.
Open a Help To Buy ISA
A great option for first time buyers is the Help to Buy ISAs. Anyone over the age of 16 can open the account with up to £1,200 and then each month add up to £200 to the amount. The state then adds to your deposit when you choose to buy a home, of up to £3,000.
Find out more on ISAs here.
Cut costs not your lifestyle
It’s easy to feel like we have to punish ourselves and eat only beans on toast for years when we think of saving for big ticket items such as house deposits.
To keep you motivated to continue to save for your house, or anything else you need to save for, you need to find ways that cut unnecessary costs yet don’t impact your lifestyle too much it leaves you feeling blue.
By taking lunch from home to work, skipping every other coffee trip and staying in instead of meeting friends in fancy restaurants, you will start to see extra money appearing that you can add to your savings funds. Instead of regular cinema trips you always could sign up for a TV service to watch everything at home with friends and family.
There are many ways you can cut costs that won’t cut out the joys and luxurious you usually enjoy. Thus keeping you happy and content to keep saving for your first home.
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