Buying a first home is one of the biggest purchases many of us will make in our lifetime. For most young buyers, saving enough money to purchase a property and get onto the ladder can be an extremely daunting prospect.
The information within this article was accurate when it was written on 8th April 2021. Stamp Duty Land Tax rates were amended on 1st October 2021; for up-to-date information please refer to our Stamp Duty guide. Any offers listed are subject to terms and conditions and expiry dates may apply.
It may feel like the total amount you’ll need to become a homeowner is unachievable, but don’t worry; saving for your first home is actually very doable if you make a few adjustments to your lifestyle, stay organised, have a clear plan and adopt these simple-yet-savvy saving techniques.
Set your target amount and a time-frame
Firstly, you’ll want to establish what you can realistically afford to buy. Consider the assets you currently have, like your savings and your earnings, and assess how much you will comfortably be able to put aside monthly.
Remember, the price you see on the property listing is not the only sum that you will have to pay. Other costs associated with buying your first home include stamp duty, moving your goods, furnishing and decorating, legal fees, mortgage fees, and so on; it is therefore crucial to take these factors into consideration and break down the amount you’re saving for in order to plan ahead.
The largest, most important sum of money you will need to save for is the deposit. This can usually be anything from 10% upwards, but incentives like the government-backed Help to Buy: Equity Loan allows homebuyers to reserve their property with just a 5% deposit (subject to eligibility, terms and conditions), thus halving the time it would normally take to save. You can learn all there is to know about Help to Buy here. Find a Help to Buy agent.
You’ll also need to consider how much you will be able to borrow to understand your budget. Note that the maximum mortgage you’ll be able to take out is based on your salary, the size of your deposit, your monthly outgoings and your credit score — these rules are in place to ensure that people borrow what they can comfortably afford to pay back. Generally, the more you earn, the more likely it is that you will be loaned a higher mortgage; the less you earn, the lower the amount. If you’d like personalised mortgage advice, the experts at Visionary Finance can help to guide you in the right direction.
It may seem blindingly obvious, but if you are buying a home alone, you will need a larger sum of money than if you buy with someone else. If you have a partner, friends or family members who are also looking to buy a property, it may be worth buying together as your combined income will allow you to apply for a larger loan. We recently interviewed two friends who bought a two bedroom flat together at Wimbledon Grounds — click here to hear Chris and Sharene’s story.
Choosing your home
When it comes to choosing a property within your budget and determining what you can afford, there are several things to consider. Factors such as the number of bedrooms, the private external space included, the location and the facilities will all affect the total cost of the property.
Looking for a home but not sure where to start? Our property search tool can help you find the right home. Alternatively, call 020 7620 1500 to speak to a member of our team today.
Changes you can make to help you save fast
Move somewhere cheaper
If you’re paying a large sum each month on rent, you may want to consider moving somewhere cheaper temporarily while you’re saving to buy a property. A good way to reduce the cost of rent is to move to a flat-share or a co-living development with shared communal spaces.
Invest your money
ISAs — or Individual Savings Accounts — are a fantastic way to save tax-free and get more from your money. Look into getting a Lifetime ISA, for example, if you are between 18 and 40 years old. This ISA is a popular option among first-time homebuyers as it allows you to put in up to £4,000 each year until you reach 50, and the government will give you a 25% bonus (up to a maximum of £1,000) per year. You can only withdraw the money you have saved in your Lifetime ISA if you are buying your first home, are aged 60 or over, or are terminally ill, otherwise you will face a withdrawal charge. This makes it harder to access your saving pot, thus helping you reach your goal without frequently dipping in. You can find out more on the government website about how to open a Lifetime ISA.
Switch banks
From earning a £100 cash bonus to receiving cashback on bills, getting discounted media packages and an even a case of wine worth £180, certain banks offer perks and incentives when you switch from another bank. Money Saving Expert has put together a comprehensive guide to help you compare the different rewards on offer at each bank so you can easily switch and make some extra cash.
Join an online bank
Over the last decade, the world has witnessed the emergence of a new age of finance: digital banks. If you want to move away from traditional banking and move towards online-only banks, avoiding the hassle of going into a branch, there are various online banking apps that have specific features designed to help you save.
Monzo Bank, for example, whose slogan is ‘banking made easy’, is a popular option among many young people saving for something big. As well as replacing your main current account, the app allows users to create saving ‘pots’ that can be locked until a set date. This is a fantastic tool to help you save money for your deposit, but you can also create separate ‘pots’ for different things: for example, you could have one pot for furniture costs, one for your deposit, one for legal fees, the possibilities are endless. Providing a handy monthly summary feature to track spending and the ability to set targets, this app is a valuable tool for budgeting. Setting an account up is quick and easy, learn more here.
Make small lifestyle changes
It goes without saying the number one way to save quickly is to stop spending money on unnecessary things, and you’ll be surprised by how much money your saving pot could soon rack up just by making some small changes here and there.
Whether it’s going out for fancy dinners regularly or paying for premium subscriptions for lifestyle products that aren’t necessities, reducing or cutting out these non-essentials can help. Be prepared to make sacrifices but don’t change your life to the point where you aren’t able to enjoy anything, as this is not realistic. It’s important to strike a balance.
Setting daily, weekly or monthly budgets is a great way to facilitate this and help you keep on top of your spending. There are plenty of free useful guides and planners out there to assist you with this that are ready-made and are easy to use — check out the Money Advice Service’s useful free online budget planner, or Money Saving Expert’s free downloadable planner.
Take advantage of incentives and look out for deals
Most Galliard Homes properties are sold with incentives to help home buyers. Many of our come with a free furniture package included to ensure buyers can move straight into a fully-furnished home without the extra costs and hassle of decorating. We will also pay the first three years of service charge on properties at Papermill House and are including a free gym membership with properties at St Edwards Court. Click here to browse our latest offers and keep an eye out for deals here.
Galliard’s Stamp Duty Holiday Extension is another superb limited-time incentive to help you save on your new home. Between now and 31st January 2022, Galliard Homes are offering purchasers who exchange before this date a potential saving of up to £25,000!
