Looking to save for your first home? Here's Five things you should consider...
Buying your first home can be daunting, as much as it is exciting! When saving for your first home, whether you have no current plans to buy, or you're eager to put down that initial deposit, there's plenty of things that factor into the savings process. So how much £££ do you need to save? Here's Five things to consider to help you...
#1 - Time v.s Money
The lower the house price, the less you need to save.. right? Consider this: a three bedroom detached property for £300k, or a two bedroom semi for £350k. Seems obvious! So what's the catch?
The state of the property has an significant impact on the price you can secure on it. If you're up for some DIY, renovating could get you on the property ladder much sooner than waiting for a 'ready to go' home. This isn't always the case, of course, but typically speaking, homes needing some TLC will get you 'more' for your money.
Renovating may seem the ideal way for first-time buyers with limited funds, however the money saved in buying is almost always substituted with time and effort spent transforming your home. But, If you're willing to give up your weekends, you can end up with a tailor-made home of your dreams with sky-rocketing value.
Daunted by DIY? Everyone has to start somewhere! The internet is made for those who are new to a hammer... and we're all in it together. Find more DIY tips on our Youtube Channel.
#2 - Be Realistic
Time is an important factor in both the saving and buying process and varies person to person. Whether you're looking to buy alone, or with a partner, the time scale for saving can lengthen and shorten as your situations change.
If you're looking at saving seriously, planning is the best way. Work out (through budgets or other means) how much you can comfortably save each month. This will help you work out how long it will take you to save. Of course this can be influenced by your outgoings, so if you're not willing to sacrifice them latest pair of trainers, maybe think about stretching your horizons.
Don't add too much pressure! You should focus on YOUR situation; try not to let seeing others buying sooner impact your self esteem. Buying a home is an investment, goal, achievement... whatever you want it to be. It should be done WHEN you can afford to do so.
Read '5 Tips for Saving for your first home QUICKLY' for budgeting hacks
#3 - Location, Location, Location...
No, we're not on about the TV program. However it does demonstrate the difference in prices!
When saving for your first home it may seem obvious that prices in London will be a steep incline away from those in other areas, but have you actually looked at YOUR area? When we were looking for our first home, we narrowed our 'location' to our home town, however we soon realised that prices varied dramatically depending on where in our 'small' town we were looking!
Needless to say, this shouldn't mean you to tie yourself to a specific village, street or postal code. But when looking at seriously saving, having up-to-date knowledge of house prices in and around the local area will help you set goals on how much you will need.
House price searches can be a pivotal moment. The realisation that (for what you want) the prices in your area are too high can leave you deciding:
1) Save for longer - do I have the time, or am I desperate to move out?
2) Save for something smaller - can I get a 2 bed instead of a 3 bed?
3) Move location - are house prices lower outside of my local area?
So get yourself on Rightmove! Lets give yourself something to aim for.
#4 - Five Year Plan
The next thing you should ask yourself is: 'Where will I be in five years time?'
Seems Silly, and sometimes a very open ended question. Who really has their life planned down to the minute? Nevertheless, a five year plan can really shape your savings plan. Let me show you...
You may want to save for the BIGGEST property that you can afford, sound about right? Many try and save for a three bedroom property (for example) when in reality, only need a bedroom for themselves. This philosophy isn't telling you to buy a studio flat, but, if you're five year plan involves: renovating & selling or relocating (etc), it may be worth downsizing initially, enabling you to buy sooner (lower price, faster to save).
On the other hand, if you're buying with plans of it being your forever home; starting a family; or wanting a property to suit all of your future situations, it may be worth saving that little bit more and aiming for a larger property that you can expand in.
For me personally, buying our first home was not just for our own independence, we were interested in renovating over a five (or however long period), with aims to move, upsize, or downsize according to our needs as they arose. In other words, we weren't planning on living here forever. We were therefore open to a smaller property if needs be.
#5 - Save Smart
Saving is something we all have to do... unless you've got a new-found fortune. One HUGE factor to consider is maximising your savings in order to save efficiently and within your means.
Again, sounds obvious huh? Saving £x a month is the simplest form of saving and can often seem endless. This is where Saving Smart comes in. Utilising platforms, accounts, government schemes; even down to an easy to use Budget log, can help shorten your saving timeline. If you get them in place sooner rather than later, you will thank yourself when you come to finding that house.
What Next?
Some food for thought? Hopefully you have a few things to help you plan your first home venture. For tips on HOW TO SAVE, why not read This?
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