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How to budget when you’re a First Time Buyer

Home Estate Agents / August 16th 2017 / 0 comments

It can be a daunting world out there for first-time buyers – it seems like a mountain to climb when you want to get on the property ladder. The good news it that it doesn’t have to be so intimidating and we’ve put together a handy guide for you to use and refer to when you’re trying to budget.

Follow our tips and start to put plans in place to make owning your first home a reality:

How much will I need to buy a property?

It all depends on the type of property you’re going for and your price-range, but we’re going to use an average first time buyer property of around £150,000. With this price, you’ll need to secure at least 5% to 20% of the price for your deposit, so for £150,000, 5% is £7500. The more you save, the more mortgage options you’ll have available to you too.

It’s worth looking at some government schemes you can potentially assess:

  • Affordable housing schemes
  • Help to Buy
  • Shared Ownership

What else do I need to budget for?

Unfortunately, it’s not as simple as just saving for a deposit. There are lots of other expendable factors you need to consider when looking at your first property. An Aviva survey found that first time buyers were under-budgeting by an average of £6481. You’ll also need to save and account for the following services:

  • Solicitor’s fee
  • Stamp Duty
  • Buildings insurance
  • Survey costs
  • Mortgage arrangement and valuation fees
  • Removal costs
  • New furnishings and structural work in new property

And there are other costs too, that you might be paying off on top of your monthly mortgage payments, so it’s important to really assess whether a property will be affordable and you can keep up with living costs.

Here’s an easy-to-use tool from Nationwide to help you calculate your living costs, taking different lifestyle aspects into consideration.

Saving Options

It can be difficult to save for your first time property while you’re renting, but putting aside money every month can help you on your way.

  • Use regular savings accounts to put aside money every month, you’ll usually have quite good interest rates with these accounts as you’re locking your money in for a short amount of time, usually 12 months.
  • Easy access accounts let you get your hands on the cash you’re saving but the interest rates are quite low, but they’re good if you’re trying to save in a short amount of time.
  • Cash ISAs are a great way to save. You can choose from variable rate ISAs and fixed rate ISAs. There are lots to choose from and the terms and conditions vary.
  • Fixed rate bonds are useful if you’re saving long term and you’ve used up your full cash ISA allowance. You usually need to deposit a set amount first and you won’t be able to access it.

If you need advice about buying your first property and you’re not sure where to start then get in touch with our friendly team at Home EA today.


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