Money-saving tips for first-time homebuyers

Aspiring first-time buyers have been thrown several curveballs by the property market in recent years. 

Overall inflation has hit personal finances hard, while the Bank of England raising interest rates has had a profound effect on the mortgage market. This means that getting on the property ladder has just become a little more expensive.

With some smart saving tips for first-time buyers, you’ll soon be searching for your dream first step. Here's a breakdown to help you navigate the financial landscape and become a homeowner.

Budgeting tips

• Know your numbers: Create a detailed budget that tracks your income and expenses. Many free online tools and budgeting apps can help. Be honest with yourself – how much can you realistically afford to save each month?

• Cut the non-essentials: Analyse your spending habits. Can you curb subscriptions you rarely use? Explore cheaper alternatives for groceries and entertainment. Every penny saved is a penny closer to your goal.

• Automate your savings: Set up automatic transfers from your current account to your savings account. This "out of sight, out of mind" approach will ensure you stay on track.

• Consider a side hustle: Explore ways to generate additional income. Freelance work, online gigs, or even a part-time job can significantly boost your savings.

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What help is available?

• Government schemes: The government offers several schemes to assist first-time buyers. Check your eligibility for a Lifetime ISA and the First Home scheme which can help with the deposit or purchase price.

• Mortgage lenders: Many lenders offer special products for first-time buyers, often with lower deposit requirements or competitive rates. Shop around and compare different mortgages to find the best deal.

• Stamp duty: First-time buyers benefit from significant relief. You pay no stamp duty on properties up to £425,000. You can find helpful information about stamp duty on the government website.

How much will I need?

• Deposit: The minimum deposit required for a mortgage is typically 5% of the property value, however, a larger deposit (ideally 20% or more) will unlock better mortgage rates and save you money on interest in the long run.

• Additional costs: Factor in additional costs associated with buying a property, such as fees to cover your solicitor’s costs, surveying and mortgage advice.

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The ongoing costs of homeownership:

Owning a home comes with ongoing expenses beyond your mortgage payment.

• Council tax: This annual property tax varies depending on your location and property band.

• Utilities: Costs for heating, electricity, water, and internet will vary depending on your usage and property size. You may also want to factor in costs for entertainment like television and streaming services. 

• Maintenance: Budget for unexpected repairs and routine maintenance. Boiler services, clearing gutters and chimney sweeps should be part of the annual TLC you give your home.

• Building insurance: Protecting your property is essential and will help keep a roof over your head if the worst were to happen to your new home.