Saving up to buy your first home and get on that first step of the property ladder can be really exciting, but you do need to make sure that you go about it in the right way. Saving for your first home can take a lot longer than you might realize. Here are five tips to help you budget for your first home.
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Be Realistic About What You Can Afford
This is your first home so you need to be realistic about what you can afford. While you might have dreams of a cozy 4-bedroom country cottage with acres of gardens around it, there is no way that you will be able to afford it. Therefore, you should think about what you can actually afford.
Make a list of some of the things that you want from your home, such as the number of bedrooms and proximity to public transport if you need it. You can then do some research to find out what these types of homes typically go for in the area where you are searching. Will you be right on the money, in need of some adjustments, or able to get your money’s worth? Only a little research will tell.
Be Realistic About What You Can Save
Once you know how much you have to save for your deposit, you need to be realistic in how much you can save to get there. You are going to have some costs and expenses in your life that you can’t ignore – like rent and car payments. These have to be made.
Take a look at the chunk of income you have left and try to work out how much you will realistically be able to save of it. It is really easy to claim that you will be able to put away most of it and live really frugally until you have saved up enough. Will you actually be able to do this though? It is always going to be better to put away little and often rather than sporadic big chunks that you might struggle to keep track of otherwise.
Don’t Forget the Extra Fees
Buying a house is not as simple as saving up the deposit and securing the mortgage. You need to make sure that you have additional funds that can be used to pay the extra fees and expenses that come with this complicated transaction.
For example, you need to make sure that you are thinking about the mortgage closing costs and other admin fees. You will also need to pay your solicitor and other individuals who have helped you buy your home. On top of that, don’t forget about the cost of your moving fan to take your belongings to your new house! There are a lot of extra costs hidden behind the ticket price of your property, and you have to be able to afford them!
Set Up a Standing Order
One of the easiest ways to save and budget for your first home is to set up a standing order to move the money to your spending account. Have it place either the day you get paid or the day after just to guarantee that the money will be there. A standing order is an automatic payment, so the money should just move without you having to do it manually.
When trying to save, this can be a neat little trick as it means that you do not have to do it manually. The money will never be “available” for you to spend. Instead, it will be tucked away in your spending account as fast as you can blink. It is a neat way to handle your finances to make sure that you don’t accidentally spend them or forget to move them to the relevant account.
Cut Down Your Spending
As soon as you make the commitment to save for a mortgage, you need to assess your spending habits. Take an evening to sit down and assess your weekly budget – or make one if you don’t have one! – and see where you can make a savings or two.
You don’t have to sacrifice parts of your everyday life to be able to save up for your first home, but there are a few cutbacks you can make so that you purchase faster. For example, cooking more at home rather than eating out or getting takeaways could save you more than you imagine. Take a look at where you could make a savings!
Budgeting and saving for your first home can be difficult, but the above tips should put you on the right path to get started. Take a look at some of the tips and tricks out there that could benefit you, and start saving up the deposit for your very first home!