It’s a daunting thought isn’t it, saving all that money for a deposit for your first home! Lots of people would also have you believe you need more than you actually do as well. For now, let’s say you need at least 5% of the price of a house, the more the better though 10% or even 15% will have a noticeable effect on interest rates and that will bring your monthly cost down too. There’s more on that here in a video you might find useful.
So how do we get started and how much shall we aim for? Well of course this depends on your situation, how much you earn, what sort of house would you like, do you rent at the moment? All of this will affect how easy it is to save, for example living with your family, whilst maybe not your preferred choice, will surely mean you can save loads! But paying as much as your new mortgage on rent will make it really hard to save at all.
It also depends how much you really want this? A question only you will know but the more you want it the harder you will work for it. Here is the challenge from me… Save! Save and then save some more! How much can you save each month? What else can you cut down to get you there? Let’s think about that for a moment, do you need Sky right now? How much is that car every month? Could you cut down on that for a while? Set yourself a target and make it happen each month. You may even be surprised how quickly you can get that 5% together. Trust me, those other things can come later on, when you are in that house!
So let’s picture the scene, the day arrives when you put that extra bit of money in your savings account and you’re there, you have enough, awesome! But wait… what else do we need to pay for now? Not much don’t worry but there are a few more costs to consider, solicitors, stamp duty (first time buyers don’t pay this up to £300k) so we are going to need an extra couple of thousand, sorry! But it’s the truth!
Ok so we have the deposit, we have the fees, we know how much you can borrow, you can find a house and eventually get the keys! Woohoo! But then what? What do we need to budget for now? Well, we have the mortgage obviously, that’s going to be the big one. But then we have the really important bit, what happens if something goes wrong? What if you are ill? That income that has helped you save up and is now paying for the mortgage is at risk! We need to protect it. We need to make sure if anything goes wrong you don’t lose the house you worked so hard for. So, some budget is definitely needed for that – I would usually allow about 10% of your mortgage here, solely for protection. Then you have your other bills, Council Tax, Gas, Electric, water, but then really its just your living costs, your food and travel. You should be used to all that saving by now so all we are doing here really is spending the same amount!
So, there you have it, that is what we need to do. Hard work, yes. Possibly takes a long time, yes. Worth every moment, absolutely! That feeling of getting the keys to your very own house, you just can’t beat it.
Good luck! & Don’t forget you can see more of our tips and advice on our Facebook page.
