When you are a first-time buyer, it can feel like a daunting task to save for a property deposit. House prices and living costs are continuing to rise and many people worry about not ever being able to reach the finish line. However, with our advice and the right approach you can save your deposit. We’ve helped many people on their home-buying journey so here are our tips for first-time buyers looking to save for their first home.
Have clear goals
Most lenders require a deposit of at least 5-10% of the property’s purchase price. For example, if you are looking at a £250,000 home, your deposit might range from £12.500 to £25,000.
Once you know your goal, try to break this down into monthly savings targets. This will make the task seem less overwhelming and give you a monthly goal to work toward, keeping you focused and motivated.
Open a Savings Account
We don’t know if you are like us but when we are saving it is better to keep your everyday spending money separate. Some savings accounts, like an ISA, offer tax-free interest, which can help your savings grow faster. In particular, the Lifetime ISA (LISA) is a fantastic option for first-time buyers aged 18 but under 40 years old. You can save up to £4,000 per year, and the government will add a 25% bonus, up to £1,000 per year, to your savings. However, if you make withdrawals for anything other reason than buying your first home or aged 60 or over then there will be a 25% tax charge.
Look at your budget
By looking at your monthly income and expenses can help identify where you can cut back whether that’s dining out, subscriptions, or impulse shopping. Every little bit counts!
A great trick is the 50/30/20 rule, where you allocate 50% of your income to essentials like rent and bills, 30% to discretionary spending and 20% to savings. You can adjust these percentages as necessary to increase your deposit savings. Small changes can make a big difference over time when saving a property deposit.
Increasing your income
There could be ways to earn a bit extra income on the side, this could be through freelancing, selling unused items, or taking on a side hustle. While it may not seem like much, every additional pound saved moves you one step closer to your goal of owning a home.
Stay Consistent
Saving for a deposit takes time and dedication. While it might feel slow at first, consistency is key. Stay focused on your goal, track your progress and celebrate the milestones along the way.
As a first-time buyer, saving for a deposit can feel like a mountain to climb but with a plan, smart saving strategies and a bit of discipline, anything is possible. Before you know it, you will be collecting your keys and stepping into your first home.
If you are a first-time buyer and would like additional advice on saving for your deposit, please get in touch.