First home buyers: How to plan and save for your purchase

first home

The average age of first home buyers in the UK is increasing. Follow our advice and you will be able to buy a property earlier than you think.

Unfortunately we live in a time where owning a home is no longer a right. You are no longer guaranteed a house just because you’re a grown up. Buying your first home has moved way down the list of priorities for youngsters now. They are more focused on paying off student loans, finding their career and at the same time enjoy life.

But fear not, as difficult as it may seem, there is always a way to afford a first home. It will take a smart and sensible approach to saving, but with our advice buying a house will soon be a reality for you.

When should I start saving?

Saving money, whatever the amount doesn’t happen overnight. It’s important to know that you’re in it for the long haul. It’s never too early to start saving.

Unless you have a mammoth nest egg that you’re sitting on, you will need to save to buy a home. While the numbers you will need to save may seem daunting, building up a savings pot is easier than you may think.

first home

How do I stay motivated to save in the long run?

Cut costs where you can. Know what you’re working toward and use that as a way of driving you forward when times get tough. You can even see it as a challenge to yourself, to see if you can stick to your new money saving life.

Sometimes sticking to a major goal is easier when you include family, friends and workmates in the challenge, because they can hold you accountable. Another tool is to keep pictures of your dream home as a reminder of your goal in your wallet, on the fridge or next to your computer.

How much do I need to save?

The normal deposit you will need is around 5% to 20% of the cost of the home you would like. The more you save, the easier it will be to apply for a wider range of cheaper mortgages.

Your budget and how to cut spending is up to you. One thing to keep in mind is that a lot of people just focus on the deposit. This is a mistake you do not want to make. It is worth trying to save for a further 3 – 6 months’ worth of expenses. This way you are covered for all eventualities.

Besides mortgage repayments you will have extra expenses including:

  1. Mortgage arrangement and valuation fees
  2. Stamp Duty (or Land and Buildings Transaction Tax in Scotland)
  3. Solicitor’s fees
  4. Survey cost
  5. Removal costs
  6. Initial furnishing and decorating costs
  7. Buildings insurance

The costs may seem huge but it’s important to be aware before you start your savings journey.

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Do I need to be aware of my credit score before I apply for a mortgage?

While saving, it is worth keeping an eye out for your credit score. You should always be aware of your credit situation if not your credit score. The type of people you will be dealing with, will know your credit score and base their decisions on it. Your score is a number that has a huge impact on what you can and can’t buy in the future. Companies like EquifaxExperian and CallCredit will let you check your current credit score.

Am I eligible for support from the government when buying my first home?

To help first time buyers out, there are some government-backed schemes to support you.

Help to Buy helps those with a small deposit. If you have a 5% deposit you could qualify for either an equity loan. This allows you to borrow 20% of the purchase price interest-free for the first five years on a new build home. You could also get a mortgage guarantee on all properties across the UK.

The Right to Buy/Right to Acquire scheme allows local council or housing association tenants to buy their home at a discount. Most cases need the tenant to have lived in public sector housing for 3 years. The size of the discount depends on where you live and the house you want to buy.

There are many other schemes that may better suit your situation. Make sure to research these before you set out. It may mean you have to save less than you first thought.

What do I do once I have a deposit saved up?

Once you think you’ve saved enough money, you will need to look for a mortgage. Now this is a part of the process that requires a much longer explanation as finding the right one can be tricky. Be sure to research this and speak to a mortgage broker.

We hope this information was useful. The sooner you start preparing yourself  the easier and quicker you will be able to achieve the dream.

It’s important to be patient and flexible during all stages of buying a home. When you finally get there, there is no greater feeling than owning your own home!

Please feel free to contact us if you require help with your mortgage or mortgage protection.

first home